Bitcoin is the only asset everyone is talking about in 2020, whether it’s for or against cryptocurrency. Naysayers are in full swing, and the supporters are stronger than ever and growing with the number – even with celebrities, hedge fund managers, and more.
Top crypto and traditional finance analysts, as well as the greatest believers in wealth, expect each of the rare coins to reach prices of up to $ 400,000. But why then do only 12% of Deutsche Bank customers who responded to a crypto survey see that the price per BTC reaches $ 100,000 or more? Are these customers far from it, or are the recent skeptics of the stock-to-flow model correct, and cryptocurrency will lag far behind expectations?
Contrarian Investing: Will preventively kill the current Crypto Bull run too soon from euphoria
Some of the world’s largest investors have built their fortunes on contrary strategies. Warren Buffett was an advocate of fear while others are greedy and vice versa. Baron Rothschild is credited with the quote “Buy the blood on the street”. And John Templeton warned: “Bull markets arise from pessimism, grow from skepticism, mature from optimism and die from euphoria.”
Black Thursday of 2020 was as pessimistic as it gets for Bitcoin, an asset that was about to crash to zero for the first time. In order to stop the cascade effect that caused the collapse, the liquidation machine of the derivatives platform BitMEX had to be shut down.
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As the asset recovered before halving, crypto investors remained skeptical about the sudden impact the pandemic had on the global economy. For the remainder of the year, talk of Bitcoin “maturing” into a respected financial asset became the norm, thanks to the digital gold history and the asset’s outperformance over any other traditional asset in a year when it needed the most money.
But are projections for $ 400,000 and beyond a sign that the market is getting euphoric and there is a risk that momentum will weaken, as Templeton suggested? And is that why the majority of Deutsche Bank respondents fail to see that the cryptocurrency hits more than $ 100,000 or more per BTC?
12% of Deutsche Bank respondents who believe Bitcoin will exceed $ 100,000 in 2021
Given that the leading cryptocurrency by market cap is at the fore for much of the financial world, whether they are believers or not, it has drawn wider criticism from experts outside the norm of the crypto industry.
Instead of listening to Willy Woo or Charles Edwards – respected Bitcoin analysts – traditional finance pays more attention to analysts from Wall Street branches they know and trust.
Deutsche Bank customers were asked their thoughts on where Bitcoin could be in a year from a recent survey. The price of the asset for the next year is a hot topic right now with what appears to be a bull market afoot.
However, the price predictions that respondents put forward paint a far less optimistic picture than most. The majority agree that Bitcoin will trade higher in 2021, ranging between $ 20,000 and $ 49,999. Less than a third of those polled are unsold and expect Bitcoin to be below $ 20,000 in 2021.
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But only the smallest subgroup of 12% believe the cryptocurrency that is expected to change the world will hit over $ 100,000 in the next year. Is the majority wrong, not the right audience to ask, or does the data have something to offer?
Bitcoin is cyclical and appears to be following a four year bubble pattern due to the asset’s hardcoded halving mechanism. But because there are so few cycles before, there isn’t much to infer other than that random cyclical behavior exists.
But if the limited data is enough to get investors to subscribe to the four-year theory, couldn’t the same data and “falling yield” theory also exist?
According to Deutsche Bank survey participants, it will be Bitcoin in 2021 | BTCUSD on TradingView.com
Bitcoin has been in two major bull markets, according to the graph, with the third potentially starting now. From the 2013 bull breakout to the 2014 high, the cryptocurrency posted a return of 8972%. If you divide that ROI by 4.61, you get roughly 1950% – the exact ROI of the 2016 bull outbreak to the high of $ 20,000.
Reducing the 1950% by an additional 4.61 for the exact percentage of declining returns, predicts an ROI of around 420% more upside potential between 2020 and 2021 and a target of around $ 100,000 per BTC.
If so, the current euphoria is not exhausted, but the bull run may not make it to such heights until the next try or based on the law of declining returns over multiple cycles.
Featured image from deposit photos, charts from TradingView.com
