- 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.
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