Bitcoin peaked at $58,340 on February 21, after which it pulled back to $43,160, shrinking by 26%. According to Material Indicators, this decline was used by whales and institutions to buy assets from small investors. For example, the number of orders for the purchase of BTC in the amount from $0.1 million to $1 million reached record values on the Binance crypto exchange. And now, twenty days later, on March 12, Bitcoin broke the $58,000 bar again. However, at the time of writing the review, It could not update the historical high, stopping at $58,240
The BTC/USD pair rose last week amid the rise in the US stock market. Although, most likely, this is only a formal reason, and not a real reason for the activation of the bulls. It was clear that they would definitely make an attempt to rise above $60,000. And the only question was when it would happen.
According to CryptoQuant, the demand for bitcoins continues to grow, and their number on exchanges has fallen to a two-year low. As Bloomberg experts point out in their February report, bitcoin is becoming an increasingly popular asset among a wide variety of investors and is gradually replacing gold from their portfolios. According to the authors of the report, the reduction in the range of price fluctuations signals that the main cryptocurrency has actually become an alternative to traditional investment assets.
The overall capitalization of the crypto market is also committed to new heights, along with bitcoin. It grew from $1444 billion to $1756 billion over the week. And now the volume of $2 trillion will become an important psychological level for it.
Interestingly, despite the weekly growth of the BTC/USD pair by 20%, the Crypto Fear & Greed Index, on the contrary, fell from 77 to 70, which may indicate the general bullish mood of the market.
And another interesting observation. Bitcoin's market dominance has declined from 70.4% to 61.4% since early 2021. The indicators of altcoins from the TOP-10 have also gone down or remained at the same levels. But the total capitalization of smaller tokens has risen from 10.3% to 14.4%. It is unlikely that these coins can arouse the interest of large investors. Therefore, such statistics can only indicate that players have begun to use them more actively for short-term speculation.
Recall that in early March, the head of the crypto bank Galaxy Digital Mike Novogratz sharply changed the forecast for the BTC rate for the end of 2021. “It feels like,” said the banker, “we’ll stay for a bit between $42,000 and $60,000, and then see the next big jump to $100,000.
The Bloomberg team is also positive about the further rate of the main cryptocurrency. "After the coin broke above $50,000, it got the opportunity to test higher values. Demand for this asset is increasing, and its macroeconomic indicators are improving,” they say in their February report. According to Bloomberg analysts, bitcoin will be able to reach $100,000 this year, and its value will also continue to rise in the long term.
So how long will bitcoin hang out, in Mike Novogratz's words, between $42,000 and $60,000? Or are we on the eve of the big jump?
A number of experts are pessimistic. As the reason, they point to miners who are buying more and more video cards on new chips, which leads to higher prices and a shortage of such cards on the market. This situation is somewhat reminiscent of the end of December 2017 - January 2018, when the mining boom ended with a market collapse, the destruction of many miners and the onset of a crypto winter. There may not be a new winter this time, experts say, but strong frosts are not entirely out of the question.
In the longer term, electricity costs for mining will also hinder the growth of digital assets. They are constantly growing, and this process consumes energy comparable to that of a country like the Netherlands already. At some point, it will require the energy of the whole world to generate just one unit. And this, according to futurologists from Singularity University, will become an insurmountable obstacle for the crypto market.
However, if there are bear pessimists, then there will certainly be bull optimists. So, according to the head of ARK Investment Cathie Wood, the price of bitcoin is most correlated with real estate prices at the moment. But in the future, she believes, bitcoin will become similar to low-risk instruments like bonds and will enter the recommended portfolio of investors. “I think the first cryptocurrency will behave like fixed income markets,” Wood said to CNBC. “We have survived a 40-year bond bull market. And we won't be surprised if this new asset class becomes part of the investment portfolio. Perhaps it will be 60% stocks, 20% bonds and 20% cryptocurrency.”
The forecast, according to which the bitcoin rate may reach $1 million or more in the next 10 years, was announced by the CEO of the Kraken crypto exchange Jesse Powell. “Right now we are only guessing, but if you value bitcoin in dollars, then you must understand that its value tends to infinity", he said. In a dialogue with Bloomberg reporters, the head of Kraken also said that bitcoin could eventually replace all major fiat currencies that are not backed by gold and other precious metals. However, he agreed that there is a risk of sharp market fluctuations, and that prices could "rise or fall by 50% any day." Therefore, according to Powell, when investing in bitcoin, it is necessary to be ready to keep it in your portfolio for at least five years.
Here you can find some general answers to the most common questions about cryptocurrency.
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