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Just last year, the claim that Bitcoin could reach $100,000 bitcoin by 2025 seemed like an overly optimistic prediction to most investors. Fast forward just a few months into 2021, and analysts at JP Morgan predict Bitcoin could surpass $150,000. With institutional investors like Tesla, Square, Grayscale and PayPal putting Bitcoin on their balance sheets, the sentiment of the cryptocurrency markets has shifted bullish, and a $100,000 bitcoin (or more) is on the table for 2021.
Bitcoin is the first decentralized peer-to-peer cryptocurrency that introduced the world to blockchain technology and later became decentralized finance (DeFi). As Bitcoin price enters another rally, the question rises — will Bitcoin reach $100,000?
Is $100,000 Impossible or Possible
Bitcoin remains an extremely volatile asset. To determine if it is possible for Bitcoin to go to $100,000 it is best to take a look at previous cycles price action.
At the time of its deployment in 2009, Bitcoin was traded for less than 1 penny. About 1 year later Bitcoin had its first rally, appreciating to over $30 per BTC. A few months later, Bitcoin entered its first bear market reaching a floor of about $2.
Fast forward to 2013, Bitcoin entered another rally reaching all-time highs of over $1,200 — leading to a 40,000% return on investment for Investors who bought at the previous all-time high. Over the next year Bitcoin depreciated to under $200.
In 2017, Bitcoin entered another bull market, appreciating to about $20,000 — an 800% return from the previous high of 1,200. The following years would develop into a bear market for Bitcoin, hitting a local low of about $3,200.
The post-Covid rally marked an all-time high for Bitcoin at right under $65,000 per coin — within the next few months the price of Bitcoin consolidated, with a local low touching $29,000.
If these Bitcoin bull cycles continue to grow modestly, it is possible for Bitcoin to reach $100,000. That would put Bitcoin’s market cap at roughly $2 trillion, not far behind Microsoft's market cap of $2.4 trillion.
Analysis and Predictions for Bitcoin’s Value
The value of Bitcoin comes from a few different factors, including block rewards and market sentiment. Considering every 4 years the amount of Bitcoin rewarded to miners halves, this slowly affects the supply in circulation, which affects price.
The current market sentiment of Bitcoin seems very strong as price recently broke all-time highs, as well as the release of Bitcoin ETFs on the NASDAQ. Investors are now able to invest without physically buying the asset itself. The institutional demand for Bitcoin is stronger than ever as companies look to expand into the DeFi space.
Will Bitcoin be Unstable at $100,000?
If the cycles of Bitcoin price continue to stay consistent, it is likely that Bitcoin will not be a stable asset any time soon. Historically, when Bitcoin reaches an all-time high and price has topped, price consolidates for a period of time before entering its next bull run, which leads to dramatically volatile prices.
Benefits of Investing in Bitcoin
There are many benefits of investing Bitcoin for investors. The market never closes, which allows traders to buy or sell Bitcoin at any time of the day. Another appealing aspect of Bitcoin would be its finite supply — where there will only ever be 21,000,000 BTC ever minted.
Cons of Investing in Bitcoin
A major con of investing in Bitcoin is that it is a hard asset to value, leading to its volatility. It is important to consider that the value of speculative assets like crypto, art and gold come from what people are willing to pay for them.
Another con of Bitcoin would be the type of asset it is. Considering Bitcoin is a store of value, If you are looking for a cryptocurrency to invest in for micro-transactions or to purchase digital assets, Bitcoin may not be the best choice. There are altcoins that provide different features for small transactions like these.
Mining and Proof of Work
Bitcoin relies on the out-dated proof-of-work consensus mechanism, where computers validate blocks of transactions by solving mathematical puzzles every 10 minutes, a process known as mining.
The first computer to solve the puzzle and clear the transaction is rewarded a small portion of BTC. Every 4 years the block reward for Bitcoin is cut in half, known as the “halving.” Historically, Bitcoin has entered bull markets around the halving. The rewards have a direct impact on the supply of BTC in circulation, which impacts price.
Best Online Exchanges to Buy Bitcoin
There are many different crypto exchanges for traders to choose from, a few of them being Coinbase, Webull, eToro, IBKR and Voyager. A centralized exchange is a great way for individuals to start buying cryptocurrency. Make sure to take a look at what each exchange has to offer, as they do offer different features for investors.
Bitcoin as an Investment
As an Investment Bitcoin is completely speculative. There is a large following that believe the DeFi space is a bubble waiting to burst. Others believe that it is the most revolutionary technology we have ever built and it will completely restructure society.
If you are looking to invest in a long-term crypto project, then Bitcoin may be a great investment for you. Always remember — don't invest more than you can afford to lose, and Bitcoin may always be a volatile asset.
Frequently Asked Questions
Is Bitcoin a good investment in 2021?
So far this year, Bitcoin has performed better than almost any other asset. Bitcoin’s price has risen 73% since January of this year and there’s no indication that this momentum has shifted bearish. Many cryptocurrency investors think 2021 is a great year to invest in Bitcoin, as indicated by long-term logarithmic charts.
Can Bitcoin hit $1 million?
For Bitcoin’s price to hit $1 million, its market capitalization would need to reach $18.6 trillion –– roughly 20 times what it is today. If history is any indication, it’s unlikely that Bitcoin’s price will reach $1 million in this market cycle.