Bitcoin (BTC) surge as much as $33, 136 before settling to around $32,000 per unit on Saturday, January 2. Many analysts suggested that the cryptocurrency will pull back before it reaches that price, but it appears they’re wrong.
A growing number of institutional investors and even billionaires are becoming interested and some disclosed that they have substantial investments in Bitcoin. The cryptocurrency is considered a high-risk investment but it is attracting more investors and driving its price higher. Its rallying streak, which started in December, seems unstoppable.
Last week, Cointelegraph Markets analyst Michael van de Poppe predicted that the cryptocurrency’s next wave could reach the $40,000 level.
On the other hand, the founder of SkyBridge Capital, Anthony Scaramucci, who invested $25 million in Bitcoin believes it will become a “very strong asset class over the next decade.”
According to data from BofA Securities, “long Bitcoin” was the third most cramped trade market in December 2020. That being said, Bitcoin analysts believe that it became an inflation-hedge and a currency that can deliver profits to investors in a short period compared to other investments. Bitcoin is currently outperforming gold and the U.S. dollar.
Is there a chance Bitcoin will crash
The legendary investor and third-richest person in the world, Warren Buffet called Bitcoin a “rat poison squared.” He believes that it is worthless and won’t last for too long. He is advising investors to stay away from Bitcoin. He explained that the cryptocurrency does not produce anything and its price is driven by investors’ excitement and speculation.
Additionally, billionaire Elon Musk also made fun of it on many occasions and supported the meme-based cryptocurrency “Dogecoin”.
Hitesh Jain, vice president of research for Yes Securities Ltd agrees with Buffett and Musk. He said, “Ultracheap money pumped in by global central banks has found its way into many assets, including Bitcoin. We are in a scenario where safe-havens and riskier assets are all rallying simultaneously, which is a theoretical contradiction. So much so that even negative-yield bonds are garnering inflows. It has become like hunting with the hounds and running with the hare.”
“Large investors who are put off by a weak dollar are flocking towards bitcoin, irrespective of the fact that it lacks inherent fundamentals. Unlike gold, bitcoin is extremely volatile. So, I don’t think bitcoin can replace gold as an inflation hedge.” Hitesh added.
To sum it up, some analysts say that the cryptocurrency rally is similar to that of 2017 and a correction can occur at any moment. Some billionaires say that it won’t and they believe that its best moments are yet to come.
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