Bitcoin Price Analysis for 2021 (In-Depth Review)
BTC Price Forecast for 2021
We’ll be sharing the top Experts predictions for Bitcoin in 2021.
Read our Bitcoin BTC Price Analysis in 2021
It’s fair to say that 2020 has been a year of uncertainty for the financial markets. The COVID-19 pandemic threw any well-placed predictions and analyses into disarray - particularly those of the notoriously volatile cryptocurrency market. But as we approach 2021, it seems investor interest is returning to the crypto market with renewed optimism and there may well be light at the end of the tunnel.
As always, the charge has been led by Bitcoin. After a shaky start to the year, the price of Bitcoin rallied to an all-time high of $19,850.11 at the end of November, which has naturally generated some serious interest in the cryptocurrency’s potential for 2021.
So what could the year ahead have in store for the world’s most famous digital currency? In the following Bitcoin price analysis 2021, we’ll consider the various factors that could affect Bitcoin’s price, as well as consider what industry experts have to say.
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Bitcoin - An Overview
Before we delve into our Bitcoin Price analysis for 2021, it’s worth recapping some key facts about the cryptocurrency and the technology behind it.
Bitcoin was the first-ever cryptocurrency and is singularly responsible for putting blockchain on the map. Created by Satoshi Nakamoto - about whom we know almost nothing more than a name, Bitcoin was designed to be the world’s first decentralised, peer-to-peer digital payment system with its underlying blockchain technology offering secure transactions without the need for verification from a bank or financial institution.
Bitcoin transactions work thanks to a complex system wherein network nodes verify transactions by solving blocks of complex equations in what is commonly known as Bitcoin mining. For each block that is verified and added to the blockchain, miners are rewarded with BTC, which acts as an incentive for them to continue operating within the network.
Every four years or so, the reward dispensed by the Bitcoin network is reduced by half, resulting in miners receiving fewer BTC as time goes on. This is process is referred to as a halving. Another important aspect of Bitcoin is that the supply of tokens is capped - there will never be more than 21 million Bitcoins in circulation. These features effectively simulate a deflationary effect and provide scarcity so that Bitcoin’s value can - in theory - behave in a similar way to other scarce commodities, such as gold.
At this stage, you might be wondering why all this history is relevant to a Bitcoin price analysis in 2021, but as we shall see, the workings of cryptocurrency and blockchain technology are often intrinsically linked to how the price of tokens moves - and how market sentiment can be affected by developments outside of the cryptocurrency industry.
History of Bitcoin Price Movement
It’s fair to say that the price of Bitcoin has moved a lot throughout the years. In fact, the cryptocurrency market in general is notoriously volatile. But it is precisely this volatility that makes cryptocurrency such an attractive opportunity for traders. We can use Bitcoin’s historic price movement as a jumping-off point for our Bitcoin price analysis for 2021 - it is arguably the best indicator we have of how the BTC market will respond to certain influences.
At the time of writing, Bitcoin was trading at around $18,325 - but as we shall see, this number can look wildly different within just a few months, weeks, days - or even hours.
As Bitcoin teeters near its all-time high in terms of value, it’s strange to think that when the cryptocurrency was launched it was almost worthless - when the initial code was released to the wider market and traded at less than a penny a year later. It wasn’t until 2011 that BTC reached parity with the US dollar. This slow start is, of course, fairly easy to understand. Blockchain was an entirely new technology and widespread understanding of its application and potential took some time. The years 2011 - 2013 were when the spotlight really began to shine on cryptocurrency and 2013 saw Bitcoin’s price fluctuate between $350 and $1,242 - by which point it was firmly established as an asset with real potential for profit.
The price of BTC bounced around over the next few years but by 2017 it had exceeded $1,000 in value and was to hit an all-time record of $19,783.06 before the year was out. Suffice to say, a lot of early investors had made huge gains and the eyes of the world were now firmly fixed on Bitcoin and other cryptocurrencies, with huge coverage across mainstream media and a surge in interest from retail investors.
But to indicate just how much the price of Bitcoin can move, in 2018 its value dropped by around 80%, reaching a nadir of around $3,000. By 2019, Bitcoin was once again on the move, this time in bull markets that saw prices reach $14,000 before confidence once again started to wane.
Bitcoin in 2020
As we have seen, the price of Bitcoin changes quickly and often by a huge margin - but overall it has been climbing and many analysts predict that this will continue over the longer term. Looking at Bitcoin’s price movement in 2020 to gauge how it may change in 2021 presents a slightly different problem.
Of course, the COVID-19 pandemic was something of a curveball and a worldwide pandemic is not something most traders will factor into future predictions as a recurring event. Bitcoin started the year with a promising outlook, but as the crisis grew it inevitably saw its value drop. Bitcoin dropped from a high of $10,000 to a low of $3,800. Then in November, almost out of the blue, BTC rallied to its highest ever price of just under $20,000. This naturally makes it a very intriguing prospect for the year ahead and our Bitcoin price analysis 2021 has heard some very optimistic opinions from the crypto world.
Experts Predictions for Bitcoin in 2021
In order to form a balanced Bitcoin price analysis for 2021, it’s necessary to collate information from several areas. Naturally, looking to the opinions and predictions of leading crypto experts is a good way of gauging industry sentiment towards Bitcoin and the market in general.
What are crypto experts predicting for Bitcoin price in 2021?
Co-founder at Morgan Creek Digital Anthon Pompliano has issued his own Bitcoin price analysis for 2021 and is sounding very positive regarding the token’s price trajectory. “It’s going to be pretty aggressive,” he says. “I am pretty confident in Bitcoin to $100K by the end of 2021." Pompliano added that he believes the ever-decreasing supply of Bitcoin tokens combined with increased interest from institutional investors will see Bitcoin’s value soar to levels never seen before.
Galaxy Digital CEO and billionaire investor Mike Novogratz is also extremely positive about Bitcoin’s future. He affirmed via his Twitter account that “Bitcoin is now an institutional asset. Period” and believes that the institution-led buy-in that saw Bitcoin’s price rally at the end of 2020 will continue to drive its value up in 2021.
Henri Arslanian, Global Crypto Leader at PwC, also believes that traditional financial institutions will continue to move into the crypto space and predicts that many private banks are much more open to providing services relating to cryptocurrency investment. Writing for Yahoo Finance, Arslanian also points out that “2020 saw a record number of bitcoin wallets” opened so we can expect to see demand continue to increase throughout 2021. Although he stops short of making a Bitcoin price analysis for 2021, Arslanian is unmistakably optimistic about the future of the cryptocurrency.
Popular cryptocurrency investment analyst Willy Woo has predicted big things for Bitcoin in the year ahead. “My Top Model suggesting $200,000 per bitcoin by the end of 2021 looks conservative, $300,000 is not out of the question," he tweeted. After analysing various market signals he added that Bitcoin’s trajectory is "pointing to reflexivity increasing, an amplified 2021 bullish feedback loop".
Another expert predicting a surge in value for Bitcoin is Citibank analyst, Tom Fitzpatrick. His own Bitcoin price analysis for 2021 is bullish, to say the least. He predicts that Bitcoin will reach $318,000 in the coming year, citing Bitcoin’s historic trajectory as a key indicator. Interestingly, Fitzpatrick also believes that investors are increasingly seeing Bitcoin as a means to hedge against inflation and as a “safe-haven asset” in the wake of COVID-19.
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Factors Affecting Bitcoin Price
There are four main factors that most affect the Bitcoin price:
1. Bitcoin Halving
We have already discussed halving - where the reward offered to Bitcoin miners is reduced by 50%. The last time this occurred was in May 2020. Historically, halvings have been followed by price increases, as block halving inevitably reduces supply without necessarily affecting demand. However, there is no way of knowing how the COVID crisis may have thrown a spanner in the works - we may well see a delayed effect that will help Bitcoin’s value to rise in 2021.
2. Demand from Institutional Investors
A key factor for any Bitcoin price analysis for 2021 will be continued interest from institutional investors. Interest from financial powerhouses like JPMorgan, Standard Chartered, Citibank and Deutsche Bank not only acts as an effective seal-of-approvement for cryptocurrency, but it also moves Bitcoin towards being an institutional asset and offers real, tangible value as opposed to Bitcoin’s worth being created solely via social construct. Having institutional investments embrace Bitcoin is also a step towards private banks taking a more serious approach to cryptocurrency.
3. Regulations Related to Cryptocurrency
Cryptocurrency and blockchain are still relatively new and most nations around the world are still getting to grips with their regulatory approach. Of course, the whole appeal of cryptocurrency is its decentralised nature, which poses something of an issue for jurisdictions looking to regulate how it changes hands. As far as Bitcoin price analysis for 2021 goes, it’s worth noting that there are rumoured to be new EU regulations in the pipeline - the European Commission this year published the first draft of its Markets in Crypto-assets regulation and this is something that could have a big effect on Bitcoin’s price. For UK investors, Brexit could also lead to regulatory changes, which will have a knock-on effect for the international market. Anyone interested in trading or investing in crypto will want to keep abreast of such developments.
4. Buyer Demand
Obviously, demand will always drive up the price of a financial asset. As we have seen, 2020 saw a record number of crypto wallets opened and with popular platforms like PayPal now allowing users to easily buy and spend Bitcoin, it has never been easier for the casual investor to dip their toes into the cryptocurrency market. As such, we could well see demand increase dramatically in the coming months - which will in turn see Bitcoin’s value driven up.
Read More: What Will Drive the Bitcoin Price In 2021?
Bitcoin Price Analysis for 2021
So, how can we use all the information discussed so far to make our Bitcoin price analysis for 2021?
When you have analysts from the likes of PwC, Morgan Creek and CityBank unanimously predicting a protracted bull market for Bitcoin in the year ahead, you can be fairly confident that BTC is likely to be a good investment. However, it should be noted that there are a few different figures being mentioned when looking at the target price of Bitcoin in 2021.
Whilst there have been several very credible industry experts predicting that BTC will reach $300,000 and beyond, others have been slightly more conservative in their estimates. But even at the lower end of the scale, Bitcoin is still touted to reach $100,000 - which is some serious growth, considering that it is trading at $19,155 at the time of writing.
Should you invest in Bitcoin in 2021?
With so many crypto authorities predicting soaring prices for Bitcoin, it is tempting to rush headlong into serious investment. But it should be remembered that this is the cryptocurrency market - industry predictions have been wrong in the past and they may well wrong in the future. As with trading any financial asset, nothing is guaranteed and there are certain factors that could stop any Bitcoin growth in its tracks. But BTC certainly presents an exciting opportunity and our Bitcoin price analysis for 2021 points towards serious growth. As such, it should be part of a diversified portfolio for any serious investor.
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Bitcoin was looking very promising at the start of 2020, before the coronavirus pandemic threw us a curveball and saw prices jumping around as a global downturn wreaked havoc on the financial markets. But as the year drew to a close, Bitcoin appeared to have weathered the storm surprisingly well and prices surged to an all-time high in November. Of course, it’s hard to say how COVID-19 may have offset potential gains from the Bitcoin halving in May, but judging by how BTC has rallied, we could well be seeing the delayed effects now.
Most industry experts are predicting big things for cryptocurrency in the coming months and our Bitcoin price analysis for 2021 shows that the original digital currency could well be the front runner when it comes to investment opportunities. With big names like Anthon Pompliano and Mike Novogratz being so confident in Bitcoin’s potential, it's hard to see how there can be anything but a bull market for a large proportion of the year ahead. If you are yet to add cryptocurrency to your portfolio, then now might just be the best time to do so.
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Is Bitcoin a good investment for 2021?
Most experts agree that Bitcoin is likely to surge in value in 2021 - with many suggesting it will soar past its highest every valuation early on. If these predictions pan out to be correct, then our Bitcoin price analysis 2021 suggests the original cryptocurrency could indeed be a smart investment for the year ahead.
How did the Bitcoin halving affect the token’s value?
Historically, Bitcoin has seen substantial price increases when the mining reward halved. However, due to COVID-19, the full effects of the May 2020 halving may not have come into effect. This is one of the reasons most industry insiders are predicting a protracted bull market for BTC in 2021.
What are the experts predicting for Bitcoin in 2021?
When we conducted our Bitcoin price analysis for 2021, we were struck by just how most leading experts were unanimous in predicting substantial growth for BTC. Many reputable cryptocurrency analysts have suggested Bitcoin could reach $300,000 by the end of the year. Others are more conservative, but nonetheless believe that Bitcoin will smash its previous record high of $19,850.11.
Will Bitcoin exceed $100,000 in 2021?
No one can say for sure how Bitcoin’s price will move in 2021, but our Bitcoin price analysis 2021 identified several industry experts who confidently predicted the price of BTC will soar past the $100k mark.
Is now a good time to invest in Bitcoin?
Like most financial assets, Bitcoin had some challenging months in 2020. But as more institutional investors weigh into the crypto market and popular platforms like PayPal offer Bitcoin to buy, the price of the world’s first digital currency could well be set to skyrocket. Most savvy investors will want to add BTC to their portfolio - and now could be the best time to do so.
How do I invest in Bitcoin?
If you want to invest in Bitcoin then the first thing you’ll need is a Bitcoin wallet. These are effectively a means to store your tokens and operate in a way not too dissimilar to your regular wallet. You’ll also need to find a reputable exchange or broker that will allow you to buy and sell the cryptocurrency of your choice.