Bitcoin has experienced a significant rally in 2020-2021 because more people sought it as a hedge against the economic crisis caused by the global pandemic. Besides, Bitcoin has seen a significant increase in adoption among institutional investors and the world’s-known corporations. For instance, Tesla purchased $1.5 billion worth of BTC in February 2021. Bitcoin has even become a legal tender in El Salvador, bringing a new era into the crypto world. These are only a few reasons why the Bitcoin price has been breaking into all-time highs almost every month since October 2020.
And it’s not only Bitcoin, many cryptocurrencies have also seen a significant surge in price and updated their all-time highs. Some of them not just skyrocketed to the moon but almost reached another galaxy. For example, the SHIB to USD price shows over +61,000,000% performance YTD.
Although it would have been ideal for an investor to enter the crypto space earlier in 2020, it does not mean that it is now too late to invest in Bitcoin. Even people who bought Bitcoin at the top in 2017 entered the green zone in just three years. Also, year-end quite often becomes a good time for Bitcoiners. Over the past decade, the Bitcoin price has regularly experienced impressive gains in Q4.
Here is what experts and history tell us about the potential Bitcoin price movement at the end of 2021.
In the first half of 2021, Finder surveyed 35 financial experts to find out where Bitcoin will be by the end of the year. A majority of experts predicted a solid year for the crypto market, especially for Bitcoin, forecasting $94,967 on average as the Bitcoin price at the end of the year. For comparison, in Finder’s survey from December 2020, experts predicted that Bitcoin would trade around $52,000 by the end of 2021. It shows how the massive crypto market surge inspired experts for more optimistic predictions.
Some Finder’s panelists believed that Bitcoin could reach more than $100,000 in price this year. For example, the CEO of YAP Global, Samantha Yap, explains such an attitude by institutional adoption that should continue pushing Bitcoin upward. On the other hand, a few panelists anticipate Bitcoin’s price to finish this year below $60,000. Most of them predicted a Bitcoin price of somewhere between $40,000 and $56,000 since deep correction may start in December as it was in 2017.
In June 2021, Bloomberg published its Crypto Outlook where the company examines multiple cryptocurrencies and how they’re expected to perform in further months. According to the report, the Bitcoin price is more likely to rise to $100,000 in 2021 instead of declining to $20,000.
A similar outcome anticipates Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore, and the current situation on the options market. Vijay Ayyar told Bloomberg in October that record highs for Bitcoin are possible at around $80,000 to $85,000 based on chart patterns. Besides, he added that $50,000 holds as strong support for the virtual currency in the short term. The crypto options market suggests that the Bitcoin rally in 2021 is not over yet. According to Deribit, open positions with December 2021 expiry and the $80,000 strike call far outnumber those for the $40,000 strike put.
Potential Bitcoin cyclicity
Some crypto enthusiasts emphasize that Bitcoin has some kind of cyclical nature because of halvings that take place approximately every 4 years. According to this cyclicity theory, Bitcoin price experiences a rally for 1-1.5 years after the halving. After that, a deep correction occurs, which lasts for 1-2 years. Then, the Bitcoin market enters the accumulation period when the price trades in a certain range, and it goes for 0.5-1.5 years. At this point, Bitcoin had only three halvings (2012, 2016, 2020) that formed this cyclicity theory. The current cycle started in May 2020 when the last halving took place. It means that Bitcoin may still have some time for a price rally if the current cycle has at least a 1.5-year duration. Also, it suggests that the crypto market may face a deep correction period shortly after the further rally.
When the Bitcoin price dropped below $4,000 in March 2019 and many were predicting Bitcoin to plummet to $1,000, a former institutional investor with 25 years experience in financial markets and pseudonym “PlanB” created his “Stock-to-Flow” model. His model is based on Bitcoin cyclicity theory and the deflationary nature of Bitcoin. It has become quite popular in the crypto community and helped him to reach 1.5 million subscribers on Twitter. He presented other models as well, and one of them (called Floor model) states that the Bitcoin price should reach $98,000 in November and $135,000 in December.
Another ubiquitous crypto theory assumes that the fourth quarter is a good time for HODLers because Bitcoin has performed a price surge during six out of nine last fourth quarters. The highest bitcoin rally in Q4 that we have seen to date took place in 2013, performing +479%. In Q4 2017, the Bitcoin price has seen over 215% and many bitcoiners started to believe in a “Q4 magic”. In 2018 and 2019, the Bitcoin price dropped by 42% and 13% respectively and some crypto enthusiasts started doubting the relevance of Q4 magic. But still, there are some who connect the Q4 surge with Bitcoin cyclicity theory, stating that 2013, 2017, and 2021 should show solid Q4 performance.
Expert predictions do not always confirm and they tend to change quite often. That is why many crypto enthusiasts take these forecasts with the grain of salt. Also, past performance is not a guarantee of future performance. Cycles may look reasonable but it doesn’t mean that cycles cannot be broken. One way or another, Bitcoin has already shown a decent performance in 2021 and many things say that it still has some strength to another push. But only time will tell whether these expectations paid off or not.