Bitcoin has always been described as a store of value similar to precious metals, hence it is sometimes called digital gold. The bear market has been brutal to this cryptocurrency’s price and it has seen a drawdown of almost eighty percent from its all-time high. The latest market pump sent the crypto community into a frenzy, wherein a lot are calling for outrageous projections. A lot are expecting the price to surpass the previous $69,000 record high, while some are even betting that it will go to one million dollars within the year.
But how accurate are these projections? Is the market giving any clue on how high Bitcoin can go? Will a new record high happen this year or ten years from now? Since we don’t have a crystal ball, let us look at some clues and speculate on what is the real score.
Bitcoin Halving is Nearing
The Bitcoin (BTC) halving is an event that occurs approximately every four years. It reduces the block reward for miners in the BTC network by half. It controls the supply of Bitcoin in the market, preventing inflation and guaranteeing scarcity. As the supply reduces, and demand remains constant or increases, the price is likely to appreciate in theory.
The next halving is estimated to happen in the first half of 2024. This is approximately a year from now. Historically speaking, the BTC halving plays a significant role in pumping up Bitcoin’s price. The event is a reminder of the digital asset’s scarcity which increases the perceived value of Bitcoin. It reminds people that there will only be 21 million Bitcoin and time is running out to get one.
The last Bitcoin halving happened in May 2020. The market did not see a sudden big pump but the price eventually increased to $69,000, which translates to a more than 600% increase.
Banks will be Allowed to Keep Crypto Reserves
The Bank of International Settlement (BIS) is often referred to as the bank of central banks. It provides guidance to its members on issues regarding banking, finance, and monetary policies. In 2022, it came out with a paper on how to prudently approach crypto assets. One interesting suggestion is that banks will be allowed to keep assets crypto assets. It is suggested that crypto should not be more than 2% of the bank’s capital. While banks and traditional finance are still wary about crypto, this guidance is still a green light to hold digital assets.
Banks in the U.S. has an estimated total asset of $23 trillion. Two percent of $23 Trillion is $460 billion. This amount is significant enough to pump the crypto market cap. This is the U.S. alone. It is also possible that banks from other countries to pour money into the space.
It is not known which crypto assets will banks prefer to keep. But Bitcoin is being considered as a commodity like gold, thus making it a suitable reserve for banks.
What do Financial Institutions Say About Bitcoin?
Actions speak louder than words. Investors and analysts can say that Bitcoin will set new records high, but it might be better to follow the money. A lot of companies are investing in BTC and crypto despite the bear market. Blackrock, Fidelity, BNY Mellon, and Ark Invest are some of those who kept on building in preparation for the bull run.
Ark Invest even predicted that Bitcoin will reach a potential low of $258,500 to as much as $1.48 million dollars by 2030. Big financial companies usually spend money on research, so these estimates are something to be considered when predicting BTC’s future value.
Below is an Interview with Ark Invest CEO, Cathie Wood.
The low-end prediction of $258,500 by 2030 is still a 900%+ increase.
So Will Bitcoin Make You Rich?
The Bitcoin price stayed below $20,000 for a while. The slump is caused by several factors, which included the implosion of several crypto companies like FTX. Anti-crypto regulations also pulled down the price. Understandably, the recent pump to 28,000 would spark calls for prices to go to the moon. This pump is like rain after a long drought, and it has renewed the hope of many investors.
Bitcoin is designed to be deflationary. Its 21 million supply limit is the opposite of central banks’ fiat currencies. It is programmed to be more scarce than precious metals. We have to remember that there are gold and silver mines that are yet to be discovered.
Despite Bitcoin’s perceived advantage, the government and traditional finance are still trying to limit its adoption. This anti-crypto stance is the biggest barrier for Bitcoin to attain all-time highs. This is something that crypto investors should be aware of.
The price of Bitcoin will be decided by the community. Traditional finance will have no choice if enough people adopt it. This is what Bitcoin is all about. It is about letting the consumer decide on what is best. Once the whole world joins in, one million dollars will be too low for one Bitcoin.
This article is not financial advise. It was written for educational and entertainment purposes. Consult a professional before taking on any risk.
Featured Image from Pixabay
