Bitcoin resurgent: what the experts think
● Crypto mania “Guess who’s back,” said Eric Lam on Bloomberg. “In a return to the mania that made it a household name”, bitcoin is once again closing in on record highs – topping $18,000 on Wednesday morning for the first time since December 2017. Three years ago, Bitcoin’s price crashed dramatically when the new year kicked in. Could this latest bubble pop as spectacularly? It’s too early to call, but traders expect a wave of profit-taking. “We should have many people selling at these levels,” said Vijay Ayyar of the Luno cryptoexchange. “Especially those that bought at the top in 2017-18.”
● Staying power?
The world’s best-known digital currency “has suffered plenty of wild price swings” since launching in 2009, said Justin Harper on BBC Business. But the pandemic has proved a boon: investors have been flocking to bitcoin as a “shelter from stock market volatility”, according to Edward Moya at trading firm Oanda. Some might scoff at the notion of placing any trust in such a yo-yo asset. But one attraction of bitcoin is its limited supply, which is capped at 21 million coins. “Some feel this scarcity provides an innate value and shields bitcoin from inflation, which is becoming a worry.” And there’s an argument that the currency is becoming ever more mainstream. Last month, PayPal jumped aboard.
● Feeling bullish
“In its evolution”, Bitcoin has “displayed a repeating pattern”, said Dominic Frisby on MoneyWeek.com. “It rallies hard and fast for six months to a year and its price multiplies many times over. There is a speculative frenzy. Then the bubble goes pop.” But each time bitcoin remains “several times higher than when it started”. At the moment, it’s “off on one of its rocket rides”. There’s probably further to go with this rally, even if the price isn’t likely to hit the $318,000 predicted by Citibank analyst Tom Fitzpatrick. But if you’re out of the market, don’t buy yet: the time “to accumulate is during periods of consolidation, when it’s loathed”. When that moment comes, however, bitcoin is a “buy and hold” asset. “To those who say it’s a bubble, I say: it is new tech.” The potential is enormous. “You have to have some exposure. Just in case its biggest advocates are right.”