Elon Musk’s Tesla, which recently bought $1.5 billion Bitcoin, could be an “inflection point” for Bitcoin that may mark a shift towards “risk-off”.
Existing and potential crypto investors have been contemplating round the clock about how far would Bitcoin go from around $60,000 in the current bull run. There has already been nearly a 9x jump from $6,800 as of April 12, 2021. However, according to a Bloomberg study on crypto outlook for 2021, Bitcoin may climb (over sixfold) up to $400,000 in 2021 mirroring the bull run of 2013 and 2017. “Our graphic depicts Bitcoin on similar ground as the roughly 55x gain in 2013 and 15x in 2017. To reach price extremes akin to those years in 2021, the crypto would approach $400,000, based on the regression since the 2011 high,” according to the April 2021 edition of Bloomberg Crypto Outlook 2021.
The staggering jump in Bitcoin may ‘rhyme’ the growth the digital coin witnessed in 2013 and 2017 occurring post the Bitcoin Halving event (after every 210,000 blocks are mined) that takes place roughly every four years. Bitcoin was last halved in May 2020. “The year after a supply cut (halving) is what 2021 has in common with 2017 and 2013, along with subdued volatility. Initial support is around the 2021 average price of $44,000 to March 25,” the study noted. The reward for mining Bitcoin transactions is cut by 50 per cent during the halving event that also reduces Bitcoin’s inflation rate.
On the other hand, Elon Musk’s Tesla, which recently bought $1.5 billion Bitcoin, could be an “inflection point” for Bitcoin that may mark a shift towards “risk-off”. Further, a potential next test of Bitcoin’s maturation process is how it performs when the stock market slides. “Our graphic depicts the price of Tesla dropping about 25%, vs. a 35% rise for Bitcoin from the initial allocation announcement to March 25. Consolidation between about $40,000-$60,000 is building a base for the next leg of the rally, as we see it.”
The overall market cap of cryptos had topped $2 trillion for the first time earlier this week with Bitcoin dominating 54.1 per cent of it at a $1.09 trillion market cap, according to the data from crypto tracker CoinGecko. As of April 11, 2021, the combined crypto market cap of 6,679 cryptos stood at $2.1 trillion with Bitcoin dominating 53 per cent of the value at $1.1 trillion.