- On-chain analyst makes bold Bitcoin price prediction for 2021.
- Increasing institutional interest and supply constraints expected to fuel a new BTC rally.
In a podcast titled 'What Bitcoin Did' earlier in the week, on-chain analyst Willy Woo argued that $100,000 for Bitcoin would be an overly conservative target and named $200,000 a "sweet spot."
Changing investor profile
Regarding 2019's bull run from $4,000 to $14,000 in a matter of months, Woo noted that the fundamental investment flow didn't support that upsurge and said that it took a while for the price to bottom out in 2020. The broad-based asset liquidation amid the coronavirus outbreak also played a major role in 2020's slump, according to the analyst.
However, Woo further explained that the on-chain metrics revealed that not a lot of coins in the spot markets were sold off during that period and said that Bitcoin became extremely cheap and became a safe-haven.
Following the COVID-19-inspired decline, the low price and the increased liquidity in the market attracted long term investors and caused Bitcoin inventory at spot exchanges to drop after a two-year-long uptrend, Woo explained.
Possible Bitcoin supply shock in 2021
In an article published on his website in late October, "while there was a scary momentary collapse of price to $3,800 it was caused by a cascade of speculative long positions being liquidated on derivative exchanges by short term traders," Woo wrote. "Meanwhile investors were accumulating bitcoins from spot exchanges at a scale that has never been seen before, shrugging off any ideas that BTC isn't an inflationary hedge or safe-haven asset."
Previewing 2021's possible price action, Woo stated that he expects short-term speculators to book their profits by late January and sees the price moving sideways for a short period after that. The on-chain analyst thinks that a supply shock will follow with heightened institutional interest and it will take an increase of $500,000 in market cap to lift BTC to $100,000. From that point on, the lack of supply is expected to cause the price to continue to increase exponentially.
"I would rate $200,000 upwards as a sweet spot. $300,000 not out of the question, and I do not ridicule $1,000,000,” Woo concluded.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.