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Bloomberg Intelligence predicts $400k Bitcoin

Photo of: Nathan VDH
by Nathan VDH

100K, $200K or $300K? The predictions are multiplying for Bitcoin. Bloomberg Intelligence even predicts $400,000 by 2021. BTC would benefit from the institutional desire to protect themselves against the depreciation of the dollar and inflation.

Bitcoin’s downturn does not dampen the most optimistic forecasts. For Pantera Capital, Bitcoin could reach $100,000 within a few months, in August. Other observers go even further.

This is the case of Bloomberg Intelligence. And its analysis may be surprising. While Bitcoin is considered by many to be too volatile, its expert Mike McGlone nonetheless considers the cryptocurrency to be increasingly similar to a risk-free asset for investors.

Based on this assumption, he thus estimates that the value of Bitcoin could rise to $400,000 by 2021. “Well on its way to becoming a global digital reserve asset, a maturation jump in 2021 could see Bitcoin evolve into a risk-free asset, in our view,” he writes.

This prediction thus goes beyond those extracted from the stock-to-flow model, very often applied to the BTC price. And according to the latter, the value of the crypto-asset averages around $288,000, but over a longer period – from 2021 to 2024.

To reach these estimates, however, Bitcoin needs to win over more investors, especially institutional ones. Yet, this adoption faces an obstacle. The volatility of Bitcoin is presented as a factor that increases the risk level of a portfolio.

Bloomberg Intelligence therefore assumes that BTC would mitigate risk rather than increase it. JPMorgan makes a radically different analysis, even if it is not shared by companies like Tesla or MicroStrategy.

“The main problem with the idea that treasurers at large companies will follow Tesla’s lead is Bitcoin’s volatility,” its experts considered in a February note to investors. For them, the cryptocurrency remains a de facto risky investment.

Can volatility and low risk go hand in hand? That’s certainly not the opinion of the US Fed boss. Jerome Powell believes that cryptocurrencies cannot be “really useful as a store of value” because of their unpredictable nature.

The leader judges cryptocurrencies as risky assets. And he warns investors as such. “I think with crypto-assets, the public needs to understand the risks,” he said just recently.

Earlier this year the chief strategy officer of Morgan Stanley Bank drew a comparison. The average annual variations of Bitcoin are thus 69%, against 27% for silver, 13% for gold and about 20% for stocks. But these fluctuations are decreasing over time.