A soup of optimistic fundamental and technical indicators has led multiple analysts to envision Bitcoin at a six-digit valuation.
The flurry of experienced finance professionals includes veteran trader Peter Brandt, investment strategist Scott Minerd, and asset manager Cathie Wood. All of them, coming from different mindsets, lately projected Bitcoin at $400,000, a cryptocurrency that has been on a record bull run since March, rising by up to 1,150 percent to hit a record high above $48,000.
For Ms. Wood…
…who founded Ark Invest—an asset management firm holding investments worth $29.3 billion, the follow-up capital for Bitcoin comes from corporates. She noted that if all the companies listed on the US benchmark S&P 500 index reallocate 10 percent of their cash reserves to the benchmark cryptocurrency, the BTC/USD exchange rate will shoot past $400,000.
Bitcoin has gained dramatic attention from Wall Street in the wake of the coronavirus pandemic. Billionaire investors, including Stan Druckenmiller and Paul Tudor Jones, and mainstream corporate firms such as MicroStrategy, Square, Marathon Patent Group, and others bought the cryptocurrency against their fears of fiat devaluation and higher inflation in the long-term.
“Bitcoin is only [at] roughly a $600 billion market cap. So even half the size of Apple or Amazon, right now. Doesn’t that put it into perspective? And yet, it is a very big idea, I think. A much bigger idea than Apple or Amazon,” Ms. Wood told Yahoo Finance.
Building on the same Bitcoin narrative…
…Guggenheim Partners’ Managing Partner Scott Minerd says that Bitcoin—for now—lacks institutional involvement at a larger scale. Nonetheless, he added that the cryptocurrency could hit $400,000-600,000 per unit should it manage to mousetrap a portion of the gold market.
“If you consider the supply of bitcoin relative … to the supply of gold in the world, and what the total value of gold is, if bitcoin were to go to those kinds of numbers, you’d be talking about $400,000 to $600,000 per bitcoin,” he told CNN’s Julia Chatterley last week.
The road to higher valuations has apprehensively begun with Tesla’s large-scale investment in the Bitcoin market.
On Monday, the world’s leading electric carmaker revealed in its securities filing that it bought $1.5 billion worth of BTC in January. Its report counted Bitcoin among “alternative reserve assets” to cash, paving the way for other Wall Street firms to explore the cryptocurrency as their hedge against a depreciating US dollar.
Nevertheless, skeptics, including strategists at JPMorgan & Chase, sees Tesla’s bitcoin investment as a no-brainer for other corporate houses. They argued the cryptocurrency’s price volatility would have big firms stick to their declining yet comparatively stable cash reserves.
But…
…Mr. Brandt feels Bitcoin is “halfway home” before its price rallies further upward. The veteran trader tracked the cryptocurrency’s previous two parabolic advances to note that the third one might be underway as adoption booms.
“The bull trend in 2015-2017 experienced nine corrections greater than 30%,” said Mr. Brandt. The current market has reached just short of a single 30% correction. I am NOT predicting a 30-40% correction, just pointing out that we should expect sharp corrections at some point.”
He added that the current bull run had not seen a single correction of more than 30% since the Mar 2020 low. It indicates extreme underlying support and internal market strength that could propel BTC/USD to $400,000.