Bitcoin at $51,000. Is it a bubble or a rally that won't stop?
Crypto lovers predict the Bitcoin may touch the $1,00,000-mark by 2025-2030
The oldest cryptocurrency, Bitcoin, has touched an all time peak of $51,000. Since the start of this financial year, the cryptocurrency has given more than 70% return within the period of two months.
The current bull rally in Bitcoin started after being in a slump for three years, as in 2017 its prices crashed to around $3000. The crypto lovers predict the Bitcoin may touch the $1,00,000 mark by 2025-2030. This raises the question is this a rally that won’t stop or a bubble to pop?
Vikram Rangala, CMO, ZebPay, says, “This latest high for bitcoin is not the big news. The big news is why it’s not just speculation. It’s smart value investing by institutions, individuals, and even governments in a breakthrough technology. Bitcoin is an inflation-proof, corruption-resistant store of value backed by more reliable and transparent accounting. That is real value. In the near future, we’ll see 60000, 70000, and $100,000. In between we’ll also see volatile dips and the usual reports about the bubble bursting. Bitcoin isn’t a bubble. It’s a part of our economy now.”
It is a tricky call and only time will tell whether bitcoin is a bubble or not. According to a UBS report titled “The Rise of Bitcoin”, there are challenges around determining its intrinsic value. “The key reason why we find it challenging to come up with a valuation model is simply that Bitcoin and other cryptocurrencies don’t yet have future cash flows that we can discount.”
The report also states that “As long as the demand for cryptocurrencies is exposed to fluctuation, either because
of shifts in sentiment that affect speculative demand or business cycle fluctuations that affect demand for digital
payment services, programmable money, or stores of wealth, the volatility of Bitcoin and other cryptocurrencies
is likely to remain elevated when compared to most legal tenders and traditional stores of wealth.”
Global financial firm JP Morgan recently said that bitcoin could rally to as high as $146,000 in the long term as it competes with gold as an “alternative” currency. UBS in the report had said that the price could continue to climb in the near term given strong price momentum and the potential for further institutional adoption.