Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop. (Rick Bowmer, AP, file)
New York - Even the skeptics can’t avoid weighing in on
It seems like everyone is coming up with a price forecast these days,
with some of the biggest banks including Goldman Sachs
jumping into the action, while speculators to long-time investors are
also making their bets.
The consensus is that the biggest cryptocurrency will face some
resistance around $4 500 to $4 800 and correct, to then continue
rallying. How high? Pantera Capital Management’s Paul Veradittakit,
Tom Lee at Fundstrat Global Advisors and
John Spallanzani at GFI Group Inc. see it going to $6 000 by year-end,
while Ronnie Moas at Standpoint Research says it will keep rising to
$7 500 in 2018.
Bitcoin has been on a tear this year, more than tripling in value as
it crossed the $4 000 mark and touched a record $4 477 last week.
READ: Bitcoin surges past $4 000 for the 1st time amid speed breakthrough
since retreated about 7% from the high as investors took profit
and assessed whether the rally had gone too far. Growing adoption and
institutional investor interest, agreement on a mechanism to speed up
transactions and regulatory steps that will help the asset broaden its
reach are some of the reasons that explain the gains.
“We’re in a very healthy position right now,” said Veradittakit, vice
president of Pantera Capital, which has invested in bitcoin since 2014.
“There’s a lot of interest from traders and mainstream finance on the
rise of all these new crytpo currencies, but when they first get
exposure into the space, they’ll go into bitcoin. It has the most
liquidity and biggest brand name.”
Veradittakit said bitcoin will hover around current levels and rally
further once the underlying technology is upgraded in November, when the
block size in the bitcoin blockchain is set to double to two megabytes,
increasing transaction speed. He’s also encouraged by reports from the
local exchanges Pantera invests in that cross-border transactions are
But the road ahead might get rocky. Goldman Sachs technical analyst
Sheba Jafari wrote in a note to clients August 13 that bitcoin could erase
around 40% of its value after reaching $4 827. On a separate
note, Goldman Sachs analysts said the space is getting big enough at
over $100bn in market capitalisation that it warrants watching.
Spallanzani, chief macro strategist at GFI Group, also predicts a
sizeable fall to as low as $3 000 unless it manages to break the $4 500
level it tested last week. But then it should rebound and climb to as
high as $10 000 in 2018, he said.
“It will have to retrace a bit more before we have enough power to
break through,” Spallanzani said. He recommends buying bitcoin when it’s
above $3 800 and selling when its below that level.
Some analysts have steered clear of making price predictions, while still dipping their toes in bitcoin waters.
Tom Price, a Morgan Stanley equity strategist, said bitcoin compares to
gold in that both offer similar benefits as a store of value, such as
being fungible, durable, portable, divisible and scarce. Still, a lot of
time and trust-building will be needed before it becomes clear whether
bitcoin will also undermine demand for the metal, he said.
Cryptocurrencies including bitcoin are still very volatile and thus
not particularly safe, but that could change as their value rises and
liquidity increases, wrote Bank of America Merrill Lynch strategists
Cheryl Rowan and
Matthew Trapp earlier this month.
They score well when it comes to
diversification, as their correlation to equities, bonds, commodities,
currencies or selected measures of risk is near zero, the strategists
More longer term, bitcoin will climb to $25 000 by 2022, Fundstrat’s
Lee said, as recent regulatory approval for options trading and
settlement implies a “significant rise in institutional holdings” of
bitcoin, while he estimates user accounts are likely to rise 50%
and usage per account to climb 30%.
Moas of Standpoint Research said in an August 14 report that bitcoin
could rise to $50 000 by 2027 as he expects cryptocurrency users will
grow to as high as 100 million users from 10 million today in the next
couple of years.
“It looks to me as though we are at the same point in the adoption
curve as we were in 1995” with the Internet, Moas wrote. “Cryptocurrency
is becoming more widely accepted by the day.”
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