Note: This blog is written by an external blogger. The views and opinions expressed within this post belong solely to the author.
Three things in life are certain for a practising economist in 2019: death, taxes, and colleagues asking whether they should buy bitcoin. On the face of it, the question is deceitfully simple: all you need to know is the value of bitcoin today and where you think it will be tomorrow. However, sometimes the simplest questions can have the hardest answers.
For many retail traders as well as bitcoin enthusiasts, including institutional players, the current rise has been a sufficient justification to plunge in and go long on bitcoin with everything they’ve got. Others, on the other hand, have been eager to point out the risks of buying in, considering the volatility of Bitcoin.
If you ever wanted proof that economics is really the science of scarcity, look at the theoretical foundation for the value of bitcoin. Even the most earnest attempts to define the fundamental value of our beloved cryptocurrency have thus far been fruitless, owing largely to the fact that the bulk of economists are hell-bent on understanding bitcoin as a form of money.
What most economists have overlooked thus far is the fact that bitcoin cannot be completely understood as a form of money in the first place. Rather than that, it is the first representative of a new asset class that combines the characteristics of money (i.e., the ability to be used for economic ‘work’ in the same way fiat money can) with the makings of a revolutionary platform for complex transactions and data exchange. This is also why I believe the flagship cryptocurrency has the potential to hit $100,000 soon.
The Bitcoin ETF
For years, a Bitcoin Exchange-traded fund (ETF) was one of the most sought after investment vehicles for the cryptocurrency industry, with everyone from Gemini to Robinhood applying for approval from the SEC in the United States (to launch an ETF).
While a physical Bitcoin ETF is still in the pipeline and might not be approved until 2022, the first bitcoin-linked ETF was launched in October 2021. This ETF was the ProShares Bitcoin Strategy ETF which traded publicly under the ticker BITO. It was also an instant success, becoming the second-highest traded fund ever.
Bitcoin, prior to an ETF launch, was able to reach heights of over $60,000 per token, and with a physical ETF likely coming soon, the amount of institutional support it will see might just push it above $100,000.
The Institutional Support
In the early days of bitcoin, it seemed that most of the institutional world avoided it. From companies refusing to accept bitcoin to CEOs flat-out calling it a scam, bitcoin struggled to receive institutional support.
These days, the landscape is much different as companies like PayPal facilitate cryptocurrency transactions and allow users to buy cryptocurrency. On top of this, more companies than ever before are accepting bitcoin as a means of payment.
This increased acceptance of bitcoin means that its demand is only going to go up moving forward. It has maintained its demand in the last year and should this continue, $100,000 is well within reach.
Another reason why bitcoin will likely reach the $100k threshold is that it has shown time and time again that it will recover from its bear runs and exceed all set price points. Following its previous all-time high of around $20,000 in 2017, bitcoin saw a steep decline in price that led many to declare it as a dead crypto.
Years later, it met and exceeded the $50,000 price point after seeing a slump to around $3,000 months before the start of the pandemic. Even after seeing a price decline, it has risen yet again to a new all-time high of $66,974.77. Given what bitcoin was able to achieve prior to its new level of maturity and acceptance and its resilience time and time again, $100 k is a realistic goal.
One of the biggest changes that bitcoin has seen in the last few years is the shift in attitudes from regulators. Back in the day, bitcoin and cryptocurrency as a whole was not recognized by world governments and was mostly a niche affair. Some governments, like the Chinese – were even outrightly hostile towards crypto.
Things are much different now as crypto exchanges are being properly regulated, tax codes have been developed for the crypto industry, and bitcoin is even a form of legal tender in El Salvador, with Ukraine set to join them soon. This level of government sanction of bitcoin is only going to see it be used more, and eventually, the $100k goal will be achieved.
Let’s face it; bitcoin is more popular than ever before. Thanks to an impressive bull run last year and the many milestones it has reached as a currency, more people know about bitcoin than ever before.
With this newfound visibility, more people are considering bitcoin – some as a medium of exchange or others as an investment option.
More people buying bitcoin means a higher chance for a bull run that breaks the $100k threshold.
Despite what the naysayers claimed in the past, bitcoin has not faded into obscurity. Instead, it has soared to new heights, and perhaps the most ambitious of these is the highly sought after $100k benchmark. As with every other goal that the bitcoin community has had, there is doubt about whether or not; bitcoin can reach the $100k goal.
But all things considered, from its historical evidence to the progress it has made in between history-making bull runs, bitcoin is poised to reach the $100k goal!Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.