Bitcoin has risen by nearly 70% since the beginning of the year, leading industry insiders to remain bullish about its predicted potential to reach new heights. Marshall Beard, chief strategy officer at Gemini, a US-headquartered cryptocurrency exchange, believes that bitcoin could reach $100,000, with $69,000 acting as a stepping stone towards this milestone. Paolo Ardoino, chief technology officer at stablecoin issuer Tether, also said that bitcoin could “retest” its all-time high of $69,000.
Result of Banking Collapse
The banking turmoil caused by the collapse of Silicon Valley Bank and the failure of two crypto-friendly lenders, Silvergate Capital and Signature Bank, has also contributed to the positive outlook on bitcoin. Instead of crashing, bitcoin rallied, leading to assertions that bitcoin is offering an alternative to the traditional banking system as a place for people to keep their money safe. The recent boost in bitcoin price is also thought to be linked to the possibility that the banking crisis could reduce the US Federal Reserve’s ability to be as aggressive on interest rate rises, which would be supportive for risk assets like cryptocurrencies.
Could it become Digital Gold?
Despite the positive outlook on bitcoin, Balaji Srinivasan, an investor and former technology chief at Coinbase, made a bold prediction that bitcoin would be worth $1 million or more in 90 days. Srinivasan wagered $2 million on this prediction, which was in response to a Twitter user who bet $1 million that the US does not enter hyperinflation.
Srinivasan argued that hyperinflation would lead to the world “redenominating on Bitcoin as digital gold,” eroding the value of the US dollar and leading to nations, individuals, and companies buying large amounts of bitcoin. This prediction would represent a roughly 3,600% increase from the current price of bitcoin. However, industry insiders remain skeptical, with Beard saying that it could take 10 years to get anywhere near that figure.
Regardless of this, the recent rally in bitcoin has led to suggestions that the digital coin is becoming more like “digital gold”, a safe-haven asset that can provide investors a hedge against inflation and investment in times of turmoil. However, bitcoin has traded in correlation with stocks, in particular, the tech-heavy Nasdaq, over the past few years. Nonetheless, this year, bitcoin has outperformed the Nasdaq, many other risk-assets and gold.
Industry Remains Optimistic
Overall, there is optimism within the industry that bitcoin will continue to perform well. While some predictions may be overly optimistic, the recent rally in bitcoin has shown that it has potential as a safe-haven asset, and with continued uncertainty in traditional financial systems, more people may begin to turn to cryptocurrencies as a way of protecting their assets.