Bitcoin – $60,000 and Beyond?

Bitcoin – $60,000 and Beyond?

Bitcoin has been making waves in the market, recently pushing itself to $18,000. This milestone has largely gone under the radar in terms of media coverage compared to 2019. Yet, some traders are beginning to take notice, especially after seeing celebrities like Maisie Williams, who played Arya Stark in Game of Thrones, ask her 2.7 million followers whether she should go long on Bitcoin. The question remains: Does Bitcoin have the fundamental support to keep climbing?

Bitcoin – A Hedge for Inflation?

Many believe Bitcoin and cryptocurrencies offer a hedge against inflation, especially given the rising debt levels of governments like the U.S. and the Federal Reserve’s focus on inflation. However, some firms push back on this idea. Goldman Sachs recently sent a memo to institutional investors stating that cryptocurrencies “do not show evidence of hedging inflation,” despite their popularity as an alternative asset class. Bitcoin, though less impacted by inflation, doesn’t fully act as a traditional inflation hedge.

Bitcoin – A Suitable Alternative to Fiat Currency?

While many view Bitcoin as a viable alternative currency, it’s important to remember that a currency requires stability in its value, something Bitcoin lacks. For instance, let’s say you could purchase a $4 coffee using Bitcoin at the beginning of 2019. In January 2020, $4 in Bitcoin was equal to 1 BTC. However, by March 2020, that same $4 in Bitcoin dropped to $2.16, making it impossible to buy your coffee. This instability makes Bitcoin more comparable to gold or other commodities than a stable currency.

Bitcoin – Interbank Possibilities?

Bitcoin’s low transaction fees make it an appealing option for international transfers. Large bank fees can be hundreds of dollars, while a Bitcoin transaction can cost just a small fraction of that. For example, during the FBI raid of Silk Road, a billion-dollar Bitcoin transfer only incurred a $15 fee. With major institutions like JP Morgan Chase and Goldman Sachs appointing leaders in digital assets, cryptocurrencies are gaining traction as substitutes for interbank transfers.

Bitcoin – The “Network Effect” in Play

Maisie Williams’ tweet highlights the widespread interest in Bitcoin as a quick way to make money. Mike Novogratz, billionaire and former fund manager at Fortress Investment Group, predicts Bitcoin’s price will hit $65,000. Novogratz believes the price will first rise to $20,000 before reaching $65,000, driven by a “network effect.” This means new buyers will continue to push prices higher, creating the opportunity for others to buy in at increasing prices.

Bitcoin – Will History Repeat Itself?

Currently, Bitcoin has retraced from its $18,500 high to $17,584, hovering around a strong psychological support level of $17,000. If it drops below this level, it could retrace further to around $13,914. On the flip side, bullish investors may see this as an opportunity for Bitcoin to break past its all-time high and reach new heights. Novogratz’s theory of the “network effect” could be the driving force behind the next wave of price increases.

As the market moves forward, it seems that Bitcoin could be on track to reach new highs. The question now is whether it will break the $60,000 barrier and beyond, with some investors already positioning themselves for what might come next.