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Markets Report: Bitcoin starts 2021 with a bang as price targets reach $500,000

Forecasts are bullish on BTC across the board as December 2020 becomes its best month ever for U.S. dollar gains

Bitcoin begins a new year on a high in almost every way—and price records are just the icing on the cake for hodlers.

As 2021 begins, anticipation has never been higher for Bitcoin to have its best year ever, even as December’s gains alone topped 40%.

Modern Consensus takes a look back at the previous week and captures traders’ thoughts on what lies ahead as the largest cryptocurrency circles all-time highs of $29,500. We also publish a weekly markets outlook every Monday, the latest edition of which may be found here.

Bitcoin seals a uniquely profitable final month

The last week of 2020 was characterized by Bitcoin attempting to find support at new highs. A hugely volatile month meant that gains above $20,000 were still not guaranteed to last. 

On Monday, BTC/USD opened the week with a trip to $28,400 before a swift turnaround unleashed a notoriously choppy trading environment. With swings of over $1,000 not uncommon, traders were faced with few market opportunities. 

The atmosphere set the tone for the period leading up to New Year, with periods of volatile swings contrasting with pushes higher which resulted in new price records several times

Resistance began forming in step with those movements, cementing selling pressure at $29,000 and between $29,700 and $30,000. 

By press time on Friday, Bitcoin had nonetheless managed to take out much of the friction at the lower end of that resistance zone, with only the final two standing in the way of both new highs and the psychologically significant $30,000 barrier. 

Perhaps unsurprisingly, talk among observers on the day is focusing on the odds of $30,000 appearing and even being flipped to support. 

“Bitcoin ranging here into the New Year,” Josh Rager summarized. 

“Watching levels on 4 hr – $29,100s to $28,300s We’ve seen Bitcoin get bought up several times now – with a break above $29,200 – IMO (could) have the legs to push to $30k+”

Bulls subsequently managed to prevent the loss of $29,200, leaving higher levels still in play. 

BTC/USD offers a parting shot to 2020. (Photo: TradingView)

$80,000 BTC price becomes conservative 2021 estimate

“At what stage are we currently? Clearly we’re inside a bull market,” fellow trader Michaël van de Poppe added in his latest video update.

Conservative as ever, Van de Poppe forecast that should $20,000 hold as support during a potential future retracement, this year could see Bitcoin tackle $80,000 and even $100,000. A six-figure price tag for 2021, as predicted by various models including the popular stock-to-flow-based variants, is however “too high.”

“Given that the previous cycle took from November 2013 to December 2017, I’m still standing by my view that our next top cycle point for this crypto cycle will be 2022-2023,” he projected.

“I’m still not one of the guys that is currently expecting Bitcoin to top out in 2021.”

It is not just day traders holding that view. Getting into Bitcoin for the long term at current levels forms a major preoccupation for an increasing number of institutional investors. 

Even as the overall number of players which have gone public remains small, their commitments are telling. Grayscale, which has seen its total assets under management explode 10 times in 2020, bought over 72,000 BTC in December alone. This is almost three times more than the amount of Bitcoin released by mining in the same period.

Add the other investors accruing holdings, among them MicroStrategy and its 70,000 BTC treasury, and it becomes clear that the rush to secure more Bitcoin than is being produced is already in process. 

As data from on-chain analytics service Messari shows, Bitcoin was by far the best-performing macro asset of 2020. Year-to-date performance was 318%, versus 28% for gold and 20% for bonds.

Bitcoin’s 2020 gains in context. (Photo: Messari/ Twitter)

As Modern Consensus reported, meanwhile, the institutional “liquidity squeeze” is widely tipped to provide the fuel for dramatic price rises.

Danny Scott, CEO of U.K. exchange Coin Corner and one of the firm fans of the liquidity-driven price scenario, this week gave a 2021 price prediction of $230,931. This came about by averaging other prominent price predictions.

“This year’s curve ball is going to be the amount of institutes FOMO’ing in, that’s the part I’m not sure how we work into the predictions,” he added in Twitter comments. He added that he considers $500,000 to be “not out of the question.”

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.