After an increase of more than 70% in the last 90 days, many investors have been wondering if Bitcoin can appreciate even more in 2021.
For Bruno Perini, investment specialist and partner at Grupo Primo, it must be borne in mind that cryptocurrency is a volatile asset, and should be understood as a long-term investment.
Despite this, in his evaluation, there are a number of drivers that could further boost his quote in 2021.
Check below, in his words, what they are:
1. Strong demand
“With exchanges reaching historically expensive valuation levels, more investors have been looking to Bitcoin as an option to diversify and protect the portfolio.”
2. Scarce supply
“There will only be 21 million units, several already lost out there.”
3. Low interest rates around the world
“It is one thing to buy Bitcoin with interest of 14.25% per year, quite another to allocate part of your capital in this cryptocurrency with interest below inflation. Maintaining low, even negative, interest rates makes the opportunity cost of loading Bitcoin very attractive. ”
4. Control of interest curves by central banks
“There is an increase in the number of central banks that, in an attempt to avoid the surge in interest rates at the long end of their curves (here in Brazil they are the IPCA + 2035, 2045 bonds etc.), they intervene to keep interest rates low through operations in who buy the most distant bonds (if a large volume of those bonds are purchased, the price of the bonds goes up and the interest rate falls). This type of operation aims to keep interest rates low for a longer time, something vital for countries with very high debts. And, as we have seen, low interest rates are positive for Bitcoin. ”
5. Unprecedented printing of money
“How many trillions of dollars have been injected into the market since the beginning of the crisis? Much of the world’s central banks cut interest rates, which encourages banks to take credit and create book-entry currency. Other than that, we still had the ‘impression’ of a huge volume of resources that doesn’t find historical parallels. With all this printing, and a license to print more, it is logical to assume that the price of what is scarce will be higher. ”
“Fear of missing out”, the fear of being left out. The bulk of investors are excited by the price hike, so the rising price of Bitcoin should attract more people, which could drive the price up even further. Bitcoin allocations are still small. ”