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Just a few years ago, Bitcoin was discarded as a currency used to fund terrorism and buy illegal items on the dark web. After the 2018 cryptocurrency market crash, some investors even claimed that Bitcoin was dead. At its local low of around $3,200 in 2018, calls for an over $50,000 bitcoin were nothing more than ludicrous.
Just 2 years later, Bitcoin surpassed this number, and the cryptocurrency market as a whole has become extremely optimistic. With large institutions like Square and Tesla adding Bitcoin to their balance sheets, the crypto markets have secured much more legitimacy in 2021.
Bitcoin currently has a market capitalization of almost $1 trillion, but can it go higher? Some investors think so. Let’s take a look at what Bitcoin seeks to achieve and how high Bitcoin could realistically go if it achieves these goals.
What is Bitcoin?
Bitcoin was the 1st public use of blockchain technology, created in 2009 by an anonymous developer dubbed Satoshi Nakamoto. Blockchains are the backbone of most cryptocurrencies, as it’s how cryptocurrency transactions can be verified and secured.
Bitcoin’s blockchain is powered by a network of cryptocurrency miners. Anyone can mine Bitcoin using dedicated computer hardware — hundreds of thousands of miners across the world currently mine Bitcoin to secure its network. These miners keep track of cryptocurrency transactions using a distributed ledger, and when 51% of the network agrees that a transaction is legitimate, it’s uploaded to the blockchain. Once a transaction is uploaded to the blockchain, it’s impossible to alter.
Back when Bitcoin was created, it’s goal was to become a peer-to-peer digital currency that can be used as a borderless payment system. Since it has seen mass adoption, however, scalability issues have made other cryptocurrencies better options for peer-to-peer transactions. Today, most investors see Bitcoin as a decentralized store of value, and it can be viewed as digital gold.
Bitcoin’s Market Capitalization
At its all-time high prices, Bitcoin surpassed a $1 trillion market capitalization. While this market capitalization makes Bitcoin more valuable than most publicly traded companies, other assets may represent the value proposition for Bitcoin better.
Many investors compare Bitcoin to gold because of its finite scarcity and use as a store of value. Gold has a market capitalization of around $8 trillion, or roughly 700% that of Bitcoin’s. If Bitcoin becomes a widely adopted store of value, it’s not unreasonable to compare the market capitalization of Bitcoin to gold.
Bull Case for Bitcoin
Bitcoin bulls have compared this market cycle to the 2015 cryptocurrency market cycle, where cryptocurrency had a local top earlier in the year with a blow-off top later on in the cycle. The top of the cycle could very well be in 2022, where Bitcoin could reach the 6-figure range.
If Bitcoin can reach the same market capitalization as gold (around $8 trillion) then we’d see roughly a 700% increase in its price. This would put the digital asset at around $330,000 per coin. More realistic estimates for Bitcoin this market cycle range from $100,000 to $180,000.
Bear Case for Bitcoin
In the worst case scenario, we’re in the beginning of a cryptocurrency bear market. With Bitcoin’s price dropping over 50% from its peak, some investors are concerned about a multiyear bear market in the works.
If we are indeed in the beginning of a bear market, you can expect Bitcoin to drop roughly 80% from its all-time high prices. Each prior cryptocurrency market cycle saw around an 80% drop in Bitcoin’s price, but with more mass adoption it’s likely Bitcoin’s price won’t fall as significantly as in the past. From its all-time high price, an 80% drop would put Bitcoin just under $13,000.
Where to Buy Bitcoin
There are plenty of exchanges where you can start investing in Bitcoin today. Depending on who you are as an investor, some exchanges may be better suited for you. Robinhood and Webull offer a great way to invest in stocks and crypto all in one place, but their cryptocurrency services are much more limited than dedicated crypto exchanges.
For most investors, the best option is to use a dedicated cryptocurrency exchange. These exchanges will give you full access to your crypto, so you can send it between wallets as you see fit. Plus, many cryptocurrency exchanges offer rewards for using their platform. For example, Coinbase pays you in cryptocurrency to learn about blockchain technology. Listen to a few short videos and you’ll get some crypto credited to your account in a matter of minutes.
How Long Will it Take for Bitcoin to Reach $100,000?
The amount of time it takes for Bitcoin to reach $100,000 depends on whether we’re still in a cryptocurrency bull market. If the bull market continues, it’s likely that we’ll see a 6-figure bitcoin by early 2022. While this may sound like a lofty goal, it’s in line with previous returns we’ve seen this bull run. Bitcoin took a mere 4 months to double in price from $30,000 to $60,000. While it’ll take a lot of new capital to push Bitcoin to $100,000, it’s not an unreasonable price target in the short- to mid-term.
If we’re in a bear market already, it may take years to see new all-time high prices. Each cryptocurrency market cycle has gotten longer than the one before it, so it’s likely that this trend could continue. If Bitcoin isn’t able to make new all-time highs in the coming months, a 6-figure bitcoin may not be in the cards until at least 2023.
Where to Store Bitcoin Safely
If you own Bitcoin or plan to own Bitcoin, it’s a good idea to use some type of cryptocurrency wallet. The 2 most common types of crypto wallets are hardware and software wallets; both offer clear benefits depending on what you intend to do with your crypto.
- ERC-20 tokens
Best hardware wallet: Ledger Nano S
If you plan on simply holding your cryptocurrency over the long-term, a hardware wallet is your best option. Hardware wallets are physical devices that store your crypto offline, making it impossible for hackers to steal your cryptocurrency over the internet.
Ledger has been selling hardware wallets since 2014, and it’s among the most reputable brands in the business. Plus, the hardware wallet supports thousands of cryptocurrencies, so you can easily store all of your digital assets in one place.
- Web3 Security
Best software wallet: ZenGo
If you plan on actively managing your cryptocurrency positions, then a software wallet is a better option for you. Software wallets are programs that securely store access to your cryptocurrency, and there are several free options to choose from for both desktop and mobile wallets.
Among the software wallets available, ZenGo is one of the most useful for cryptocurrency investors. Not only does it offer a free crypto wallet for iOS and Android, but you can even buy and sell crypto directly from its mobile app.
Bonus section: The bull market support band for Bitcoin uses the 21-week SMA and 20-week EMA to decipher whether Bitcoin is in a bull market. To get an idea of market sentiment, try using this indicator on Tradingview.
Current Crypto Prices
The cryptocurrency markets have seen a sharp downturn after the price surge we saw earlier this year, but many long-term investors saw this as an opportunity to accumulate crypto at lower prices. Since then, we’ve seen Bitcoin surge more than 50% from its bottom, and more investors are again becoming bullish on the asset class as a whole.
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So, Is Bitcoin a Good Investment?
By historical standards, Bitcoin is a phenomenal investment. It’s beaten the returns of all other asset classes over the past decade and it hasn’t slowed down yet. With institutional investors buying Bitcoin, the cryptocurrency markets have seen widespread validation for the first time ever in 2021.
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