In the 2020 corona year, the digital currency Bitcoin climbed to new heights. The price is currently scratching the $ 30,000 mark (EUR 24,471.82). On Wednesday, the price on the Luxembourg trading platform Bitstamp hit a new record high at $ 28,599. In the coming year, experts see a sustained upward trend, with forecasts of up to $ 300,000 by the end of 2021.
Bitcoin has been skyrocketing since the beginning of November. During this time, the price has more than doubled. Started at around $ 8,000, the price initially fell to less than $ 4,000 during the first Corona wave in the spring. After that, a slow rise began, which accelerated sharply in the fall.
Digital currencies are coming back into focus
There is no suitable reason for the rise in Bitcoin to the current record high shortly before the turn of the year. For the latest soaring, the market repeatedly states that the digital currency has recently moved more into the focus of major financial investors and is in greater demand. Above all, the announcement by the payment service PayPal that it would allow its customers to pay with Bitcoins resulted in an enormous surge in demand. Another decisive factor on the market is that the topic of digital currencies has again moved more into the focus of investors.
The interest of professional investors is often considered to be long-term, which could stabilize the very volatile Bitcoin price. Interest in digital currencies is also being increased by the corona pandemic and the associated sharp rise in national debt. Because of this, some investors fear rising inflation in the medium to long term, which they want to hedge against with alternative investments.
Price increase could continue rapidly
For the coming year, analysts expect further rapid price gains for Bitcoin. Brian Estes, chief investor of the hedge fund Off the Chain Capital, sees the oldest and most important cyber currency at $ 288,000 by the end of 2021. That's about ten times the current record high of $ 28,599. “I've seen Bitcoin increase ten, twenty, and thirty-fold within a year.” The more than fivefold increase in the price compared to the low in March is therefore no big deal.
Naeem Aslam, chief market analyst of the brokerage house AvaTrade, argues similarly, calling out a comparatively low price target of 100,000 dollars. “You might want to laugh at the thought of that, but you mustn't forget where the course was six years ago.” At the end of November 2014, a Bitcoin cost around $ 375. Since then the price has increased more than seventy-fold.
Citigroup analyst Tom Fitzpatrick even believes that Bitcoin will increase to as much as $ 318,000 in the coming year. He justified this with a limited offer, among other things. Off the chain expert Estes bases his forecast on a model for calculating the scarcity of goods such as gold.
Supply and demand determine the value
Bitcoin is an Internet currency, the rate of which is determined solely by supply and demand. New digital coins are created by the fact that users make computing capacity available for the encryption of transactions and are rewarded for this in Bitcoin. The amount of Bitcoin issued in a certain period of time is automatically halved at regular intervals to prevent inflation. The last “halving” so far was in May 2020. A maximum of 21 million Bitcoin can be created, currently there are 18.5 million.
With a share of around 70 percent, Bitcoin is by far the largest digital currency. According to a calculation by Coinmarketcap.com, their market capitalization is currently around $ 500 billion. According to the site, all digital currencies together come to a little more than $ 700 billion. This means that the asset class is still comparatively small in size despite the recent rally. For comparison: The shares of the US technology company Apple are currently worth around 2.2 trillion dollars.
