Price Projections for 2021
As we look ahead to 2021, we can see Bitcoin presents a number of challenges in the form of risk and opportunities that are of a qualitative nature. What this might mean for the value of bitcoin is for investors to decide on.
Over the years, several models have made their way into the space, such as the stock-to-flow model, as well as holder-versus-speculator and other models, that are employed to get an indication of Bitcoin’s value.
While factors related to supply and demand undoubtedly influence price direction, we believe it is too early to depend on these frameworks. For this reason, we believe price projections are best construed on the basis of technical analysis.
For example, the stock flow model suggests that bitcoin will hit $100,000 by the end of 2021. However, when looking at the global economy and the charts, to predict a move to $100,000 seems rather unrealistic, even for an asset as unpredictable as bitcoin.
With uncertainties on the rise around the finding of a new strain of COVID19 discovered in the UK, traditional markets are looking increasingly bearish and it is unclear how bitcoin would respond, at least in the short term.
A shaking of traditional markets could lead to a 2021 market crash, similar to what we’ve seen in March 2020. If a sudden downturn were to occur, long positions would have their stop losses hit or get liquidated., potentially putting an end to the current bull run.
It is also important to note that bitcoin has increased 220% since January 2020. If the stock-flow model is correct in predicting $100,000 per unit, this would be a 1270% rise over two years and a 332% gain from our current position.
BTC/USD – If bitcoin rose to $100,000
Even so, hitting $55,000 in 2021 could be within reach. Firstly, $55,000 constitutes the 2.618 trend based Fibonacci extension currently applicable to bitcoin. Based on supports and resistance levels observed in the upwards trend from $200 to $20,000 and the move from $20,000 to $3,000 for the downwards trend, $55,000 USD forms the 2.618 level.
In order for bitcoin to hit $55,000, bitcoin must close above the 1.0 level by early January, 2021, in order to maintain BTC’s current parabolic status. It is unlikely that bitcoin will hit $55,000 in 2021 unless it maintains its current momentum. If this level is hit, it will likely be hit towards the start of 2021, with BTC charging straight through $36,000.
If BTC does not close above the 1.0 level by the start of February, this will increase retracement risk, potentially pushing bitcoin back towards $17000, which could potentially swing the balance away from the bulls. This would detract from the likelihood of bitcoin hitting $55,000. Although due to supply/demand fundamentals, it is likely that bitcoin will hit $36,000 by end of year.
That leaves us with the following 2021 BTC predictions:
- If bitcoin maintains parabolic momentum: $55,000 (likely to be hit within the first quarter of 2021)
- If bitcoin needs to retrace and loses parabolic momentum at $24,000: $36,000 – (likely in the final quarter of 2021)
- If traditional markets crash and bitcoin follows suit: $7000 – $6000 USD (However, considering bitcoin’s resilience this year, $36,000 would still be the target)
Please bear in mind, these price projections are based on technical indicators and personal viewpoints, and cannot be taken as investment advice.