Is Bitcoin heading to $ 100,000 in 2021 or is its price ‘unsustainable’?

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Bitcoin prices were breaking new records on Wednesday, but where the cryptocurrency is headed from here is an open question. A single bitcoin BTCUSD, + 3.59% hit a record high of $ 51,735.38 earlier in the day, according to CoinDesk and predictions see the world’s # 1 cryptocurrency doubling before the end of the year, while some argue that the current recovery of the virtual asset for all – time maxima are “unsustainable”.

On Wednesday, Anthony Scaramucci, founder of SkyBridge Capital and a new cryptocurrency investor, predicted that bitcoin would hit $ 100,000 by the end of the year, but suggested that investors be cautious when buying digital assets. The SkyBridge Bitcoin Fund LP has about $ 500 million in bitcoins, Scaramucci said. “I think we will see $ 100,000 in this coin before the end of the year,” Scaramucci said. “It‘s just a supply and demand situation,” he told the business network’s “Squawk Box”, referring to the higher perceived demand for bitcoins from institutions and the decline in supply of the asset. Many bitcoin bulls point to the fact that there can only be 21 million bitcoins due to a stipulation set out in their original source code as a factor likely to price the asset higher now and in the future. Scaramucci also noted that MicroStrategy Inc. MSTR, a bitcoin enthusiast, announced on Wednesday that the convertible debt offering declared in the previous session, in which proceeds will be used to buy bitcoin BTCUSD, + 4.68%, has increased by a 50% to $ 900 million. underscoring the possibility of greater business acceptance of cryptocurrencies. On Tuesday, the head of SkyBridge warned that bitcoin could suddenly drop between 20% and 50%, during a CNN interview. He added that he nonetheless believed that the asset’s price would be resilient. Meanwhile, a JPMorgan Chase & Co. research note published Tuesday indicated that bitcoin’s volatility makes a price of around $ 48,000 unsustainable. “In other words, bitcoin, at current market prices, has already more than doubled relative to gold in terms of venture capital. In our opinion, unless bitcoin’s volatility decreases rapidly from here, its current price of $ 48,000 seems unsustainable, ”wrote the bank’s strategists, including Nikolaos Panigirtzoglou. Despite a narrative focused on growing institutional interest in bitcoins, JPMorgan argues that the rise in bitcoin has come amid a modest uptick in corporate purchases. “What has been remarkable in the last five months is that the $ 700[billion] the increase in the market capitalization of bitcoin has occurred with relatively few institutional flows, ”wrote JPMorgan. The bank estimates the aggregate bitcoin investment from companies like Tesla Inc. TSLA, -0.77% more recently, to be just $ 11 billion as of late September, which it says accounts for only 1.5% of the increase in market value. . JPMorgan offers two theories for why prices have soared to records in relatively modest new interests. The institution says the inelastic supply of bitcoins from mining and a premium offered to existing holders to part with their coins is helping to drive prices. The other possibility, says JPMorgan, is that individual investors are giving bitcoin prices a bigger shake than previously estimated. “A second possibility is that the retail tickets have significantly magnified the institutional flow. As mentioned in the first section above, US retail momentum has been particularly strong since January and there is little doubt that this retail momentum has been a driving force not only for stocks, but also for bitcoin, ”they write. the strategists. In any case, bitcoin prices remain high thanks to the increasing attention of traditional investors. Several high-profile Wall Street players, including Stanley Druckenmiller and Paul Tudor Jones, have embraced Bitcoin. Famed investor Bill Miller, founder of Miller Value Partners, in a letter to clients posted earlier this month on the company’s website, reaffirmed his bullish outlook on bitcoin. In Wednesday trading, bitcoin prices are up 77% year-to-date, while the Dow Jones Industrial Average DJIA, + 0.00% is up 2.9%, the S&P 500 SPX, -0.19% is up 4.4%, and The Nasdaq Composite COMP, + 0.07% indices are up 8.3% so far in 2021.