ANALYSTS at respected financial publisher Bloomberg today became the latest, and perhaps most unlikely, bulls for bitcoin with a detailed report concluding the cryptocurrency could hit a valuation of $400,000 (£290,000) this year.
The analysis, based on statistical modelling of recent data compared to previous runs, suggests the digital currency is “on similar ground” to 2013 when it surged by 55 times, and 2017 where its value shot up 17-fold.
The report, in the April edition of the New York-based media group’s Crypto Outlook 2021, said: “To reach price extremes akin to those years in 2021, the crypto would approach $400,000, based on the regression since the 2011 high.”
The researchers see echoes of this year’s rally in those of the two previous major runs, which both came around a year after the practice of ‘reward halving’ on the Bitcoin blockchain - the vast digital network inside which the asset is embedded.
This process takes place every four years to cut the issuance of new units by 50%. The last halving was in May.
The analysts wrote: “The year after a supply cut [halving] is what 2021 has in common with 2017 and 2013, along with subdued volatility.”
Bloomberg also noted global indicators showing a “shifting global tide” in favour of Bitcoin over gold as a reserve asset, and Tesla’s decision to invest as factors in lending the digital asset more weight among mainstream investors.
The moves, it said, enhance the currency’s reputation as a “potential global digital store-of-value” at a time of rising uncertainty over inflation as the global economy flares back into life post-pandemic.
It also noted that the value of institutional assets in publicly traded crypto funds has surged to almost $60bn as of March 25 from less than $10bn in October last year.
“Even with speculative excess in the broader crypto market, we believe Bitcoin is less prone to a sustained trip up. The imminent launch of Bitcoin-oriented US exchange-traded funds is another bullish underpinning”, the report said.
It came as the currency rose by around $500 to $56500 (£41,100). Six months ago it was trading at below $20,000.