Markets Geek

This toggle bar can feature specific pinned articles perhaps

Bitcoin Bulls Hoping for $100,000 – USD Is The Enemy

Posted: Wednesday, September 2nd, 2020

Estimated Reading Time: 2 minutes

Share this article on

Bitcoin is grabbing headlines recently. As central banks around the world eased the monetary policy, a shift in inflation expectations drove investors to alternative investments.

In the world of alternative investments, digital coins are new. Gold has traditionally represented the safe-haven bet on higher inflation. But now, many see Bitcoin as an alternative.

If you want, a digital alternative. However, the more Bitcoin looks like gold in terms of its price action, the less will follow the Bitcoin bulls’ growth path.


Halving and What It Does to the Price

Every now and then, the plan is to limit the quantity available on the market. The price reacted every time, like clockwork.

By using the halving projections and the growth range defined by the previous halvings, the price should reach $41,000 by the end of December 2020. No, this is not a typo. Maybe that is not quite the target. But as long as it remains within the blue area defined above, it is in line with the prediction.

The $41,000 level represents the average growth after the previous halvings. Further down the road, this should reach $387,000 by May 2021.

Gold and Bitcoin Correlation

The problem here comes from the recent direct correlation with the price of gold. If the two trade in a direct correlation, it means that the halving will have little or no influence on Bitcoin’s price.

Moreover, it also means that another player, the U.S. Dollar, has a crucial role in future developments. Because gold is seen as an anti-dollar investment, a rise in the dollar sends the price of gold lower. But, at the same time, if gold and Bitcoin have a direct correlation, it should also send the price of Bitcoin lower.

Many investors cheer the tight correlation between the two. Some others view it as a sign of a mature market – yet another sign to jump on the wagon and invest in the crypto space.

But the crypto market’s main threat is the lack of regulation. If and when it comes, it is likely to take many by surprise.

Also, the futures market absence means that professional investors are still on the sidelines. For as long as this holds, the digital coins will have a hard time attracting serious investors.

To sum up, keep an eye on the USD when diversifying to digital alternative investments. Unlike gold, Bitcoin still has to prove itself as a worthy destination.

More articles on Alternative Investments