Citibank Group’s Global head of Citifxtechnicals product, Tom Fitzpatrick, expects to see the price of bitcoin soaring at $318,000 by the end of 2021. Nevertheless, he concedes that his prediction might seem improbable.
Still, Fitzpatrick contends that such a surge will always be the weakest rally for the digital asset than other assets such as gold. He also adds that bitcoin is all about the” unthinkable rallies followed by painful corrections.” Bitcoin will see substantial price swings before finally settling at the predicted price, suggests Fitzpatrick.
Comparable Trends
Writing in a report titled Bitcoin: 21st Century Gold, Fitzpatrick addresses the surge argument for bitcoin. He says the digital gold’s current direction appears similar to that of gold in the 1970s.
Before fundamental adjustments were implemented in the early 1970s, gold had spent 50 years trading in the $20-$35 range. However, after changes were instituted, gold surged. It recently touched a new all-time high in August before settling at just under $1,900 per ounce.
According to one report that analyzed Fitzpatrick’s paper, it is this “structural change in the modern-day monetary regime that ushered in a world of fiscal indiscipline, deficits, and inflation.” Therefore, the Citibank boss argues that bitcoin, which came to the fore in the aftermath of the “Great Financial crisis” of 2008-2009, is bound to have a similar run.
With the Covid-19 pandemic still hemorrhaging economies worldwide, governments will continue responding to the crisis by printing more money. This, in turn, will benefit safe-haven assets that perform well in inflationary periods.
Bitcoin Better Than Gold
Fitzpatrick explains that even though gold is expected to benefit from the deluge of new money entering circulation, the precious metal has unique limitations that do not seem to afflict bitcoin. In his write up, Fitzpatrick notes:
Gold has restrictions such as storage, non-portable, and could even be called ‘yesterday’s news’ in terms of a financial hedge. Bitcoin is the new gold.
To support this view, the Citibank boss cites some of bitcoin’s key attributes, which include the digital currency’s “limited supply, ease of movement across borders, and opaque ownership.” Consequently, Fitzpatrick believes more investors will choose bitcoin over gold as a result.
While Fitzpatrick foretells that bitcoin will be subjected to more regulatory constraints in the future. Regardless, unlike other digital currencies such as central bank digital currencies (CBDCs), bitcoin cannot be confiscated, making it a more secure asset.
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