Bitcoin broke the 2017 highs by a mile and seems to continue its tear.
Many people, including HODLers, have started to wonder – will this sudden meteoric rise end up in an ugly crash?
We cannot give you a ‘yes’ or ‘no’ answer, however, we can give you various perspectives so you can make your decision.
- Perspective 1: $100,000+ bitcoin predictions for 2021
- Perspective 2: Elliot 5th wave view
- Perspective 3: Global macro market crash and bitcoin
- Perspective 4: Inflation and crashing fiat
- Perspective 5: Devaluation of fiat currency
- Perspective 6: Other scenarios
Perspective 1: $100,000+ bitcoin predictions for 2021
Here are the recent price predictions for bitcoin by December 2021.
$100,000 based on Stock-to-flow ratio
$200,000 as per crypto analyst Will Woo
$300,000 as per Citibank report
$400,000 as per Guggenheim assessment
$500,000 as per Cathie Wood of ARK Investments
And there are a lot of predictions that put the bitcoin price over a quarter million dollars.
If you believe in the most conservative of these predictions and expect bitcoin to hit $100,000, how does it matter if you buy it at $15,000 or $25,000, you are going to be happy.
Using this perspective one might conclude to HODL bitcoin into 2021.
Perspective 2: Elliot 5th wave view
Seasoned traders who understand the charts and are experts at trends believe that we are on the third wave of the Elliot’s 5 wave pattern.
These traders believe that bitcoin will shoot higher between $30,000 to $36,000 by the time we reach the 5th wave and then correct.
They think that the correction after the 5th wave will be nasty although they expect bitcoin to recover immediately after the correction.
Will that recovery lead to another major bull run to carry us into the $100,000 zone? These traders are not so sure.
Using this perspective, one might be tempted to cash out profits in bitcoin in the $30,000+ zone.
Perspective 3: Global macro market crash and bitcoin
With Corona virus variant 2 making waves on the news, what will happen to the economies around the globe?
This pandemic’s 2020 effect itself will have lasting impact on global economies, what happens if a second wave happens?
What if the economies continue to lag and people become desperate?
If people lose jobs or panic sets in, we could see people liquidating their crypto assets into fiat currencies until things come back to normalcy.
Under this perspective, one might infer that cashing out profits is the wise thing to do.
Perspective 4: Inflation and crashing fiat
From the looks of it, governments around the world seem to be poised to go through another round of stimulus.
If the fiat printing machines keep at it, it is quite possible that bitcoin’s value in fiat terms will continue to shoot up and up, with no real cap.
What good will it do if you cash out profits in fiat if that fiat keeps losing its value?
Inflation has a lot of investors and companies flocking to safe haven assets and Bitcoin has been gaining momentum as Gold 2.0.
We have already seen a lot of people in Argentina who bought Bitcoin to hedge against inflation have been rewarded handsomely while those who kept their savings in fiat got burned quite bad.
Under this perspective, whether or not there will be a correction in bitcoin prices, cashing out into fiat seems foolhardy.
Perspective 5: Devaluation of fiat currency
What if countries come together and devalue their currencies. Countries could devalue their currency to increase exports and decrease imports.
Devaluation can also be used as a tool to manage excessive debt.
Can it happen?
It is possible but not probable.
But if it were to happen, Bitcoin’s price will automatically increase in fiat terms.
It may send people in overdrive to get hands on bitcoin at any price.
Under this perspective, it not only makes sense to HODL but to continue to accumulate irrespective of bitcoin prices in fiat.
What are you going to do with your bitcoin?
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