Bitcoin has had a big year so far (and 2021 could be even bigger). Bitcoin’s more than doubled in price through 2020 and this week surpassed its 2017 market capitalization, the combined value of all minted bitcoin tokens.
The bitcoin price has added almost 50% this month, shooting toward its all-time high of around $20,000 per bitcoin and pushing its market cap briefly over $350 billion, spurred on by a wave of institutional interest in bitcoin.
Bitcoin traders and investors are now turning to what will happen if bitcoin does manage to break its all-time high—with one analyst predicting it will be the beginning of a two-year run toward a $1 trillion bitcoin market cap.
“$20,000 bitcoin is [the] primary hurdle toward [a] $1 trillion market cap,” Bloomberg Intelligence senior commodity strategist Mike McGlone said via Twitter alongside a chart showing how he thinks bitcoin could reach the milestone before the end of 2022.
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If bitcoin were to reach a $1 trillion market cap it would mean an increase of today’s bitcoin price of almost 200%—making one bitcoin token worth a whopping $50,000.
“The digital version of gold but with more-limited supply and a history of adding zeros, appears to be in an early price-discovery stage and may simply continue its ascent in 2021,” McGlone said, adding: “Mainstream adoption is rising.”
Bitcoin has rallied hard since falling to under $4,000 amid the coronavirus crash in March, boosted by some of Wall Street’s biggest banks and investors turning to bitcoin as well as payments giant PayPal PYPL rolling out bitcoin buying and spending services to its near-350 million users.
Some think bitcoin reaching its all-time high market cap this week means more than the bitcoin price reaching $20,000.
“With all the buzz surrounding bitcoin reaching $18,000, I think the more interesting development is the market cap of bitcoin being at an all time high,” Peter Smith, the chief executive of bitcoin and crypto exchange and wallet provider Blockchain.com, said via email.
“Specifically, that’s exciting because not only are more and more people trusting their assets to crypto, but more capital is invested in bitcoin than ever. In these uncertain times, it’s hugely validating for the reserve asset of crypto.”
However, not everyone in the bitcoin and cryptocurrency community is convinced the bitcoin price is about to commence a run toward a $1 trillion market cap.
“It feels more and more like we’re hitting a bitcoin tipping point,” John Kramer, trader at Hong Kong-based market maker GSR, said via email, pointing to well-known fund managers and institutional investors “re-examining their bitcoin theses.”
“That’s not to say that the price will rocket past $19,000; in fact, a cool down is to be expected. While bitcoin has been quick to get back on peoples’ radars, this jump shows few marks of irrational exuberance.”
Kramer, who thinks the crypto community is “far more prepared to accommodate growing interest and different investment perspectives than it was in 2017,” is, though, still bullish on bitcoin, saying it’s still “early innings in this bull market.”
Unlike bitcoin’s 2017 bull run, which saw the price rise from under $1,000 at the beginning of the year to around $20,000 by December, the consensus among the crypto community is that 2020’s rally is largely institutional-driven, with the retail investors that helped bitcoin reach $20,000 three years ago still on the sidelines.
“Bitcoin has gotten to a place where institutional investors, banks, and family offices are legitimately pondering involvement as a defense against currency devaluation,” Alex Mashinsky, the chief executive of crypto lending platform Celsius Network, which holds around $2 billion of cryptocurrencies, said via email. Mashinsky expects the bitcoin price to hit $30,000 by 2021.
“In 2017 it was pure retail early-adopter speculation. Because large players, like Line and PayPal are involved this go around, we can expect more stability than the 2017 bubble. This isn’t a gold rush anymore, it’s a good investment.”