Another day, another Bitcoin value prediction. Yet, these days, nothing seems unrealistic.
Just a few months ago analysts were debating whether Bitcoin would pass the $20,000 level. On Monday, it reached $46,000, and incoming predictors seem almost casual in nature.
Investment firm Guggenheim Partners just released its new prediction for bitcoin’s long-term price potential at $600,000.
And that’s a $200,000 prediction boost in less than two months.
The company corrected its last prediction from December when it said that its fundamental analysis shows bitcoin should be worth $400,000.
“If you consider the supply of bitcoin relative … to the supply of gold in the world, and what the total value of gold is, if bitcoin were to go to those kinds of numbers, you’d be talking about $400,000 to $600,000 per bitcoin,” Scott Minerd, chief investment officer told CNN.
A price tag of $600,000 would make bitcoin's total value around $12 trillion which would match the world's gold market.
Last month, JPMorgan also published a note saying that bitcoin could soar to $146,000 as it competes with gold as an “alternative” currency. However, bitcoin will have to meet certain conditions if it wants to match gold in terms of market value.
The cryptocurrency will need to become substantially less volatile and even though that volatility has improved significantly of late, bitcoin remains far more volatile than gold.
“…when you consider that within a course of a month we went from $20,000 to $40,000 on Bitcoin, that smacks of short-term speculation,” Minerd said.
Yet, the fact is that with gains of close to 300 per cent last year, bitcoin outperformed by ten times the gains of gold and the Dow Jones stock market.
The recent surge in bitcoin to record levels was in part driven by the entry of larger, institutional investors into the market.
Yet, one Tweet pushed up the price of the cryptocurrency by as much as 20% within a few hours-- and only one person can cause that much turmoil.
In late January, Elon Musk added the word “bitcoin” to his Twitter profile. Just hours later, it caused a 15% rally in the currency’s value.
Soon enough it was revealed why. On Monday, Tesla, the world's most valuable car maker, revealed its new strategy in a filing with the U.S. Securities and Exchange Commission, saying that it invested $1.5 billion in Bitcoin and that its investment in digital currency and other “alternative reserve assets” may grow.
The SEC filing by Tesla also fulfilled the long demand of Bitcoin payment for Tesla cars as the company revealed that it would accept bitcoin as a form of payment.
“Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”
Tesla is now the biggest Bitcoin buyer after business analytics firm MicroStrategy which has also bought more than $1.5 billion in bitcoin.
In late October, Payment company Square said it bought 4,709 bitcoins, worth approximately $50 million, which represents about 1% of Square’s total assets.
PayPal secured the first conditional cryptocurrency license from the New York State Department of Financial Services, the first approved entity for a conditional Bitlicense in New York State.
By Tom Kool for Safehaven.com
