Bitcoin pullback is just short-term– Analysts

The price of one bitcoin has fallen this week from its record high of $ 63,000 on April 13th.

Bitcoin currently costs € 40,795 and $ 48,781. However, analysts say the pullback is temporary and that the original cryptocurrency will be higher in the coming months.

Timothy Peterson, Global Macro Manager at Cane Island Alternative Advisors, who forecast Bitcoin’s meteoric surge this year, sees Bitcoin price rising steadily in over 15 to 30 years. He justifies his analysis (“Estimation of the adoption curve and the maximum price of Bitcoin” in an article published in December 2020.

“Bitcoin’s adoption curve follows a path that is very similar to Internet adoption. Both adoption functions can be modeled with a Gompertz curve (this tracks growth based on intense activity at the beginning and at the end of a certain period of time).

Peterson’s model predicts a mystery of price growth at the end of bitcoin production and beyond that will push the price down to at least $ 1 million within 15 to 30 years. Peterson sees the possibility that it will be as high as $ 10 million during this period.

Reaching this point depends somewhat on what has happened. Negative events would further reduce the value of the Bitcoin network. These barriers include internet access, government interference, competition and obsolescence, warns Peterson.

However, most of us don’t invest quite as long as the 15-30 years it takes Peterson to analyze it.

In the short term, however, most analysts view the recent pullback as a short-term event. Profit-taking and consolidation are back at work, as on recent pullbacks, a number of analysts agree.

Data website CoinMarketCap, along with a number of other analysts, cited a power outage in China’s Xinjiang region due to a series of fires in local coal mines as the cause of the decline in Bitcoin prices. “The power outage stopped no less than a third of Bitcoin’s global computing power. We had seen estimates that were so high, but this shutdown confirms them, ”says Alex de Vries, an economist who runs the Digiconomist website, which tracks Bitcoin’s energy usage.

Katie Stockton, senior analyst at Fairlead Strategies, agrees that sentiment for Bitcoin is still strong. “Despite the increase in short-term volatility, Stockton sees a decline of around 3 to 6 percent over the course of the day, which does not affect longer-term price movements.

“The breakouts that we have already seen with Bitcoin have already been exceeded,” Stockton said in an interview on CoinDesk TV’s “First Mover”. Stockton believes Bitcoin is currently in a consolidation phase and expects a decisive breakout from the current phase in the near future.

Fixed technical issues

Positive forecasts for Bitcoin take into account that most of the technical problems on the Bitcoin network have been fixed. “Early on, the main problems related to Bitcoin were:” Is it getting hacked? “,” Is decentralization a really viable solution “,” Will the halving break the system? “etc. Now, a decade later, many of these problems have been answered. Bitcoin works with reliable technology and does not break,” insists one analyst.

However, there are technical issues that continue to make Bitcoin difficult to work with.

“In the industry, topics are discussed regularly,” warns the blockchain technology expert Jack Tanner. You are:

  • “Bitcoin cannot scale well enough to be used as a global currency.
  • Bitcoin consumes a tremendous amount of energy, roughly the same as the country of Chile and with the effective carbon footprint of New Zealand.
  • The cryptocurrency is extremely slow in processing transactions, which makes it difficult to use.
  • Bitcoin has account names in the form of cryptographic keys that are difficult to understand.
  • The Bitcoin network expects users to be solely responsible for their account management, which makes losing funds and key management difficult.
  • The network has high transaction fees that would be even higher if it were taken over more heavily.
  • Bitcoin also exhibits extreme price volatility, making it too unpredictable to be used as a currency (most people in the industry don’t believe that Bitcoin is / can be an everyday currency). “

Bitcoin is still an inflation hedge

Many hedge funds are buying up Bitcoin as an inflation hedge, and these investors are helping the coin rise in price. Investors are very concerned that the extensive quantitative easing program implemented by the Federal Reserve and the European Central Bank will cause prices to rise.

In the US, the Federal Reserve has cut short-term interest rates to near zero and is increasing liquidity with its bond purchases. As the economy recovers, Federal Reserve Governor Jerome Powell announced that the Fed could allow inflation to rise above its original two percent target before interest rates hike again. This unprecedented approach sparked a search for safe havens among investors.

One of them is billionaire fund manager Paul Tudor Jones, who bought Bitcoin in May in anticipation of rising inflation – he currently holds around $ 400 million in the coin.

“The reason I recommended Bitcoin is because it belongs to the inflation trades, like gold, like TIPS Breakevens, like copper, like a long yield curve, and I’ve come to the conclusion that Bitcoin will be the best inflation trade.” Jones told CNBC last month.

As Stockton points out, there is always daily volatility in Bitcoin, far more so than you would see with other types of investments. The trick is to keep an eye on longer-term trends.

Recent articles

Crypto exchanges struggle as El Salvador adopts Bitcoin

Today, Bitcoin is becoming an official currency in El Salvador, and the markets and crypto exchanges seem to be struggling. On...

Schools are back – and time to comply with the ICO’s Age Appropriate Design Code

As of September 2, 2021, the United Kingdom's Information Commissioner's Office ("ICO") expects organizations to use their Age Appropriate Design Code ("AADC"). The...

the ICO wants input on when personal data goes international

You don't have to be a data-focused IT service provider to realize that the UK was lucky enough to receive an adequacy decision from...