The technical outlook for bitcoin remains strong with the price of the world’s biggest cryptocurrency expected to surgeg around 600% to hit the $400,000 level in 2021, according to a research report by Bloomberg.
In the recent report titled, Rising Bitcoin Adoption Tide, Bloomberg Intelligence said the crypto asset’s adoption has become more sudden than gradual and is likely to accelerate.
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“Common companions for strong annual rallies in the first-born crypto — low volatility and halvings — are aligned favorably. Our graphic depicts bitcoin on similar ground as the roughly 55 times gain in 2013 and 15 times in 2017. To reach price extremes akin to those years in 2021, the crypto would approach $400,000, based on the regression since the 2011 high,” it said.
Volatility in bitcoin has cooled off in the recent past as the digital asset has traded in a small range of $56,134.42-59,060.03 over the past seven days. At 5.15pm IST, bitcoin was trading at $56,518.90, up 1.3%, as per CoinGecko.
Bloomberg believes that bitcoin replacing old-guard gold is more sudden than gradual. Visa, Goldman Sachs and Morgan Stanley have notably embraced the digitalization of money, buoying the process of bitcoin replacing gold as the global digital-reserve asset.
“Even with speculative excess in the broader crypto market, we believe bitcoin is less prone to a sustained trip up. The imminent launch of bitcoin-oriented US exchange-traded funds is another bullish underpinning,” it added.
As per the report, bitcoin’s baseline support has risen toward $50,000, with $40,000 representing more extreme downside risk.
The research report also came out more positive on bitcoin than gold. “The adage that money flows to where it’s treated best describes what we see as firming underpinnings for the price of bitcoin. It’s not necessarily bearish for gold, which is backing into layers of support below $1,700 an ounce, but most indicators show a shifting global tide that favors the nascent digital currency as a reserve asset,” it added.
According to the report, bitcoin’s fundamental and technical underpinnings are improving while gold’s deteriorate. Most indicators point to an accelerating pace of bitcoin replacing the metal as a store of value in investor portfolios, it added.
The world’s largest automaker by market cap, Tesla, allocating some of its wealth to bitcoin may indicate an inflection point favoring the crypto.