As bitcoin crashed into 1 million rand this week, analysts are looking towards the next target, with some seeing 1 million rand by the end of 2021.
The prospect of a 1 million rand bitcoin seemed fanciful only a few years ago, just as the “bubble” screeches sounded when it broke R300,000 in 2017. In hindsight, it was a bubble. The price was down 84% before beginning its climb to where it is today.
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Bitcoin price in rands
Farzam Ehsani, CEO of crypto exchange VALR, says that bitcoin’s breaking 1 million rand should come as no surprise to those who have taken the time to educate themselves on this asset.
“In my opinion, while I expect volatility to persist, we are seeing a very undervalued asset in Bitcoin and an undervalued asset class in crypto in general,” says Ehsani.
“I hope that in the next few years we will see Bitcoin ten times from here, but there will be tremendous peaks and valleys along this path, as we have seen in the past.
“While Bitcoin is consistently breaking all-time highs, it is not the only asset class to do so. Stock markets around the world have also been breaking all-time highs.
“So while one may be tempted to talk about the strength of Bitcoin, I think we are witnessing the weakening of government fiat currencies, such as the rand and the dollar, against a wide range of real assets and services.”
Jon Ovadia, CEO of crypto company Ovex, says: “I think we will get to $ 150,000 by the end of the year. I was completely convinced that this year we were going to exceed $ 100,000 until Elon Musk started tweeting (implying that Tesla might sell some of his bitcoins, although he later pulled out of this). If Elon had gone crazy, it would have been difficult to see $ 100,000. ”
Dean Joffe, co-founder of crypto investment platform BitFund, believes that bitcoin’s bull run is likely starting, as all short-term indicators have shown 100% buying pressure. “This is rare, as typically when an asset hits a new all-time high, market signals sell pressure as investors try to claim profits from their holdings. The short term looks extremely bullish for bitcoin as it continues to trade above the 100 and 200 day moving average. ”
According to the Crypto Fear & Greed Index, the market is in “extreme greed” territory, which means that as investors rush to the market to buy more bitcoins, the price should continue to climb (although resistance levels can be expected at certain ranges of prices).
“It’s important to note that when investors get too greedy, the market usually has to correct itself,” says Joffe.
“With a market capitalization of over $ 1.25 trillion (Rand 20 trillion) and with global institutions entering this new asset class, we may continue to see a sharp rise in the price of bitcoin. According to research by Glassnode, since supply is still a problem and demand is increasing, the price will continue to rise.
Joffe adds that the downside to this bull market may be regulatory uncertainty, as seen in South Africa, and government interference, which stifles innovation. However, based on past history, the breakout of bitcoin may signal the start of a final push this year, before a consolidation early next year. “However, naturally, due to various economic and regulatory circumstances, this cycle may not follow past history,” says Joffe.
According to an analysis by crypto exchange Kraken, if the price of bitcoin copies its 2017 performance, the top of this cycle could end up being about $ 96,355 for bitcoin. Pseudonymous crypto analyst ‘PlanB’ has predicted that bitcoin will hit $ 98,000 (roughly R1.5 million) by the end of November and will end the year at $ 135,000 (roughly R2 million).
“However, the market can change at any time due to regulatory interference or other similar events. Therefore, it remains a fundamental principle to have a well-diversified cryptocurrency portfolio and a reasonable and solid allocation to cryptocurrencies, ”says Joffe.
One of the factors driving Bitcoin is adoption by investors. In the last month alone, more than 360,000 new people have become bitcoin holders. According to data from CoinMarketCap, the number of bitcoin addresses increased to just under 39 million. There is a proven link between the rise in bitcoin addresses and the price of bitcoin. Apple CEO Tim Cook recently confirmed that he owns bitcoin, and if Apple were to announce a stake as Tesla or MicroStrategy, a sudden spike in price could follow.
Says Joffe: “Arguably traditional financial markets have been reeling from fear of inflation for the past 18 months due to Covid-19. As a hedge against inflation, new investors have bought cryptocurrencies like bitcoin, causing a rise in price. As investors continue to wait for inflation data, bitcoin has become the main inflation hedge for top investors, specifically at one point [when] gold and other hedges against inflation were down. ”