This year has brought no shortage of upside catalysts for cryptocurrency bulls. However, this weekend just delivered an even more astronomical boost of confidence to bitcoin (CCC:BTC). What exactly is the news? And what does the latest bitcoin price prediction for 2021 mean for investors? Dive in below.
To start, investors should note that bitcoin is climbing higher in intraday trading to the tune of 4.6%. A handful of news items support this upside move, but one headline over the weekend stands out. Importantly, Citibank analyst Tom Fitzpatrick released a new note, calling bitcoin “21st century gold.” More importantly, he set a 2021 price prediction for bitcoin that would see the crypto hitting the moon.
What is that price target? Well, Fitzpatrick says there is a case for bitcoin to hit $318,000 by the end of 2021. Remember, even after its recent rally, the crypto has just surpassed the $16,000 level. That means the new 2021 price prediction implies more than 1,800% upside.
Beyond the shock value of that number, it is important for investors to understand just why Fitzpatrick, a senior analyst at Citibank, is so bullish. According to his note, such a major move would follow the historical trajectory of bitcoin. Looking back to the “exponential” move in bitcoin from 2010 to 2011, he outlines a case for that same sort of path higher to unfold in 2021.
Citibank: Behind the Bitcoin Price Prediction for 2021
As I mentioned above, there are all sorts of catalysts at play that benefit bitcoin and its crypto peers. Fitzpatrick dives into the impacts of the novel coronavirus, and more specifically, actions by the Federal Reserve. Many crypto bulls think the intense interventions by the Fed, like near-zero interest rates, will boost inflation. Just like gold, these bulls see cryptocurrencies as a hedge against inflation and an otherwise safe-haven asset.
So why not turn to gold instead? Well, Fitzpatrick writes that although these same catalysts will likely benefit gold, bitcoin is better. If you want to own physical gold as a hedge against inflation, an apocalypse, or any other market-moving event, there are all sorts of things to consider. For instance, how will you store and transport that physical gold?
Bitcoin is free from those issues. Because it is a digital currency, Fitzpatrick writes that it is easy to transport, even across international borders.
How then should investors approach the Citibank price prediction? Fitzpatrick himself writes that $318,000 may seem improbable. That is why Sebastian Sinclair wrote for CoinDesk that there is a better way to consider the new target. Instead of taking it as a true prescription for bitcoin prices in 2021, take it as a good sign that the cryptocurrency is coming further into the mainstream. Through this “moonshot” price target, Citibank is exposing investors to the massive potential in crypto.
Whether you are ready to head to space or just getting off the ground, keep this new price prediction in mind. Actions by the Federal Reserve, the coronavirus pandemic and the projected victory of former Vice President Joe Biden all support a move higher in bitcoin.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.