A Bloomberg Intelligence report has analyzed the bitcoin market and its growing stature as the digital store of value. The report looked into various aspects of the top cryptocurrency, including its declining volatility, rising adoption, and growing inflow of funds from a traditional store of value assets such as gold, stocks, and bonds.

Bitcoin in 2021 is transitioning from a speculative risk asset to a global digital store-of-value, in a world going that way, in our view.

We see prudent diversification sustaining a rising tide in this price-discovery stage for nascent Bitcoin.

Bitcoin in this bull run has not just seen its price nearly triple from 2017 high but more importantly seen a massive adoption from institutions that are using it as a treasury reserve asset amid declining US Dollar value.

$100,000 Could Be Bitcoin’s Next Threshold
Bitcoin in 2021 has managed to surpass its earlier threshold of $50,000 price target and $1 trillion market cap that too only within two months of this year. With the rising demand vs. declining supply and an increasingly favorable macroeconomic environment, the report cites Bitcoin has matured as an asset class and could reach the $100,000 price threshold by the end of 2021.

It’s unlikely there will ever be a Bitcoin equivalent that’s no one’s liability or project.

The report also cites that Bitcoin’s relative volatility is on a decline against gold and if the nascent digital asset continues to behave similarly, its volatility would be less than that of Amazon and other stocks in a couple of years. Bitcoin is gaining momentum entering the 60/40 mix partly due to when paired with gold the top cryptocurrency outperforms and has less risk than the S&P 500.

The report also cites that the current price volatility and selling come from majorly from retail traders and quite similar to the early 2017 selling pattern, however in the long run hodlers would outnumber these weak sellers.

Potential For Bitcoin Price to Stabilize Around 100x an Ounce of Gold
The current selling patterns and outflow of funds from stocks and the Gold market and if the trend continues the price of one Bitcoin is expected to rise 100X the price of an ounce of gold.

A potential path for the Bitcoin price is to stabilize around 100x an ounce of gold and for volatility to resume its downward trajectory.

The report analysis suggests that bitcoin price would continue to rise by 55X to 15X as supply diminishes after every block reward halving.

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Kraken CEO Jesse Powell thinks Bitcoin’s price is “going to infinity.”
He explained Bitcoin could be worth the market cap of all world currencies combined.
Powell, unphased by Bitcoin’s volatility, sees it as an effective long-term hedge against inflation.

Kraken CEO and co-founder Jesse Powell said he believes the price of Bitcoin (BTC) is “going to infinity,” when asked about his expectation by Bloomberg Technology’s Emily Chang.

“Of course you know we can only speculate. But when you measure it in terms of dollars you have to think it’s [Bitcoin] going to infinity,” Powell said. “And I think the true believers will tell you that it’s going all the way to the moon, to Mars, and eventually it would be the world’s currency,” he added.

Chang then asked Powell to clarify his answer in terms of a numeric amount. He reiterated that true believers in Bitcoin expect it to replace all the world’s currency. “So that means basically whatever the market cap of the dollar is, the euro; all of that combined is what Bitcoin could be worth,” he explained.

He added that a $1 million price level in the next 10 years was very reasonable.

Hedging Bets on Bitcoin
Powell said that the rate at which the U.S. continues to print money would be a factor in how soon BTC reaches his astronomical predictions.

“I think people are increasingly looking to Bitcoin as a safe haven asset,” he said. “They see it as a better version of gold, and something to protect them against all of this inflation that’s happening.” Powell singled out younger people in particular as taking notice of it.

Powell said as much when he appeared on Bloomberg Surveillance in December 2020. He asked rhetorically, “How do you justify not having bitcoin on your balance sheet with the kind of inflation that we’re seeing now in the market?”

He expressed that holding dollars seemed like a “risky prospect” compared to BTC, which he said is “finite, predictable, and even a greater store of value than something like gold.”

Unwavering Belief
Chang asked Powell whether BTC’s continuing volatility made him waver in his belief. “No, it doesn’t make me waver at all,” Powell promptly replied. He said the system had continued to prove itself over the past decade, as upgrades have made it more robust, and adoption has steadily increased.

He did however say that BTC was an inappropriate asset for speculators. “I think there are a lot of weak hands out there,” he said. “They come in and day trade. They don’t really understand the fundamentals of Bitcoin.” He said those investing in BTC should be prepared to hold for at least five years, to withstand short term volatility. “The price could move up and down 50% on any given day, and you have to have strong conviction to hold through that.”

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