Bitcoin, which set a record high above $1,800 today, is “fully valued” and could see a pullback in the short term, but one investor expects bitcoin price could go as high as $4,000 over the next 14 months.
In the last 30 days, bitcoin, which has been steadily rising since April, has risen over 33 percent.
The rally perplexes some given that there have been a number of setbacks for the cryptocurrency.
The U.S. Securities Exchange Commission (SEC) rejected a bitcoin exchange-traded fund (ETF) sought by Tyler and Cameron Winklevoss. The proposal is currently under review, however, and if approved, will give new credibility to bitcoin, especially among investors.
There is also a debate raging over bitcoin’s structure that remains unresolved in many peoples’ eyes.
In addition, some cryptocurrency exchanges, such as Bitfinex, have stopped allowing access to the banking system, preventing customers from withdrawing fiat currency.
Nonetheless, there are positive developments.
Japan legalized bitcoin as a payment method, resulting in more bitcoin being bought with yen, noted Aurelien Menant, CEO and founder of Gatecoin, a Hong Kong based regulated blockchain asset exchange.
The recent change in the code of Litecoin could also bode well for bitcoin.
Litecoin has deployed Segregated Witness (SegWit), which enables for faster cryptocurrency transactions. The successful SegWit deployment raises hopes that the tool can also help bitcoin solve its scaling challenge.
A current backlog of bitcoin transactions has slowed transaction time. This is because bitcoin’s rules only permit a limited number of transactions per bitcoin block.
Bitcoin’s price fell in March on account of a proposed solution to the block size that would have created two blockchains, meaning two separate bitcoin currencies.
Litecoin’s success with SegWit, however, demonstrates how the block size can be increased without causing such a disruption.
Daniel Masters, director of Global Advisors Bitcoin Investment Fund, an investment fund listed on the International Stock Exchange on the Channel Islands, said the example of a “soft fork” in Litecoin has demonstrated SegWit can increase block size capacity and move bitcoin forward.
Previous bitcoin price peaks have suffered sharp pullbacks. Masters said the current price rise has been violent in the short term, with bitcoin “fully valued for the moment,” which could result in a pullback to $1,100.
Nevertheless, the outlook remains positive. In the next eight to 14 months, Masters expects bitcoin’s price to be around $4,000, speaking to CNBC.
Menant of Gatecoin expects the price to surpass $3,000 this year.
Featured image from Shutterstock.
Last modified: March 4, 2021 4:56 PM