Bloomberg Intelligence believes $50,000 could serve as resistance for Bitcoin in 2021—and $10,000 will now serve as a critical support level.
Mike McGlone, its senior commodity strategist, said in his December crypto outlook that the rules of the game have changed dramatically for BTC in recent months—and the notion of $10,000 as a stubborn resistance mark for the cryptocurrency is now outdated.
He reasserted his belief that Bitcoin could achieve a market cap of about $1 trillion in 2021—fueled by the sudden, dramatic rise of institutional interest seen this year. McGlone added:
“The year 2020 will likely be looked back upon as key to Bitcoin’s mainstream evolution, in our view. Strong inflows in regulated exchange-traded products, futures open interest, addresses used and allocations from corporate treasuries, and some billionaires, solidify the 2020 annual price of about $10,000 as foundation support.”
A short-term view
McGlone’s report suggests that Bitcoin may end up stalling around the $19,000 to $20,000 mark for a few months—but the cryptocurrency will continue to appreciate amid a current cocktail of “diminishing supply, increased demand and widespread adoption.”
Overall, he believes that Bitcoin’s foundation could be much firmer than in 2017—not least because just 900 new coins are being mined each day, compared with 1,800 four years ago.
“If the future rhymes with the post-halving years of 2013 and 2017, and we factor maturity of about a quarter of the 2017 advance, Bitcoin may reach $40,000 in 2021,” he wrote.
McGlone also briefly touched upon how Ethereum could fare in 2021—explaining that the $500 to $700 range is set to define the world’s second-largest cryptocurrency next year. In his view, it’s unlikely that ETH will advance further because the digital asset doesn’t have a fixed supply like Bitcoin does.
Bitcoin vs gold
In recent weeks, discussion surrounding whether Bitcoin can replace gold in the long term has begun to heat up once again. McGlone believes that it is “reasonable” to forecast that BTC’s market cap will one day be about 10% of gold’s—a substantial rise from the current level of 3%.
“The enduring nature of many of the world’s currencies attached to negative rates and quantitative easing provides solid underpinnings for gold and Bitcoin, in our view. Gold is a robust measure of all currencies over time and should continue rising. Bitcoin is the Digital Age rival in early days of price discovery,” he wrote—warning that one of BTC’s biggest hurdles remains the fact that it is too volatile to serve as a store of value.
Overall, it’s fair to say that Bloomberg has an exceedingly upbeat perspective on BTC heading into a new year, despite the fact that the digital asset has struggled to meaningfully punch through its all-time high after multiple attempts.
“There’s little to trip up the Bitcoin bull market in 2021, with most indications pointing to more of the same as 2020,” McGlone concluded.