Bitcoin to $100K: What will provide the next big catalyst?

24 May, 2019 | Updated: 24 May, 2019
by Will Heasman
Analysis
Bitcoin to $100K: What will provide the next big catalyst?

Bitcoin to $100,000? For some, this is a completely overhyped proposition, for others this is a conservative price point, undervaluing Bitcoin’s true potential; but what has to happen for Bitcoin to legitimately reach this target? Or anywhere close to it? What could be Bitcoin’s next big catalyst …?

People go nuts for the promise of their investments 10, 100, 1000x-ing, predictions are fast becoming the quintessential aspect of the crypto community. From McAfee’s infamous forecast of $1 million by 2020 to Max Keiser's comparatively more conservative $100k price point, crypto prophecies are everywhere.

More often than not, these predictions are qualified by Bitcoin (BTC) reaching parity with gold, or even becoming a new reserve currency; and while not too far removed from the realm of possibility, these scenarios aren’t going to come to fruition any time soon.   

The last time BTC’s price point went horizontal (before its recent parabola) was back in December 2017 (as if you’ve forgotten). For the most part Bitcoin’s parabolic rally to $20k was built on one bullish development: Speculation of the CME Bitcoin futures product.

BTC/USD Chart provided by Tradingview

That’s it, all of that action based on a paper derivative, which was settled in fiat.

Effectively CME futures contracts were making a bet on the price of Bitcoin, without actually trading any Bitcoin. Whoop-de-doo…

So with that flaccid catalyst in mind, let's look at some more bullish and imminent propellants that could see Bitcoin reach its previous all-time high … and then some.

Fidelity + Bakkt entering the industry

Perhaps the two most highly anticipated developments in the crypto industry. Bakkt and Fidelity look to foster the long-awaited entry of institutional capital.

The potential influx of deep-pocketed institutions has caught the attention of everyone in the crypto industry. It finally became a possibility with the announcement of both Bakkt and Fidelity last year. However, nothing really materialized besides a handful of announcements, and multiple delays, until last week when Bakkt announced the beginning of their Bitcoin futures testing phase.

The firm released a post detailing that testing would begin in July, which would include two new Bitcoin futures contracts, and custody service for the physical delivery and secure storage of Bitcoin.

Now before you ask: “how is that any different to the CME futures bullshit?” it's entirely different. Bakkt won’t simply speculate on price, it will actually buy, sell and trade Bitcoin.  

Furthermore, the firm will do so in a regulated, transparent and secure way, upon an institutional grade platform, backed by one of the world’s leading financial market companies: the Intercontinental Exchange (ICE).

This move is unprecedented and massive, it will no doubt change the face of the crypto industry, providing both legitimacy and mainstream adoption. In fact, those predictions of BTC to $1 million, based on BTC become a world currency? Bakkt wants to make that a reality; with its parent company, ICE, aiming to position Bitcoin as a “Trusted Global Currency.”

Similarly, a week prior to the Bakkt announcement, Fidelity relayed the beginning of its own operations, proclaiming that institutional clients would be able to start buying Bitcoin “in the coming months.” 

Read more: Fidelity coming: institutional investors can buy Bitcoin within a few weeks

Fidelity is a major player in the finance world, (and that’s putting it lightly). The firm has approximately $1 trillion dollars currently under management, as Mati Greenspan – senior analysts for eToro - recently said, if even 1% of those managed assets were funneled into BTC we could “easily” see a $2000 rise.

As Bitcoin and its brethren grow, this becomes more tangible as we see investors flock from traditional assets into the more profitable and widely regarded newcomer.  

A (continued) stock market collapse:

Carrying on with the theme of institutional investment, the recent weakening of the stock markets looks to provide bitcoin with a slight leg up. The logic behind this is fairly straight forward. Bitcoin is seen as a safe haven asset such as gold, with the major advantage of not being correlated with the stock markets, making it a good hedge against any potential collapse.

Several of Wall Street's major indexes have cited major losses recently, with the Dow Jones industrial average currently citing a monthly decline of 1200 points (-4.4%). 

DJI Index Chart Chart provided by Tradingview

It was revealed last week that this decline could be thanks to the US-China Trade war, as both superpowers battle for supremacy in the most damaging, yet non-violent way they can.

Read more: Time for Bitcoin?: US stocks plummet as China-US trade war continues

Many suggested that we could be witnessing a mass exodus of investors leaving their legacy asset positions for BTC:

And it's perhaps understandable as to why. Bitcoin has a proven track record of outperforming stocks, not only in the long term, in which it has grown 9.9 million percent (9,999,900%) in the ten years since its inception, but also in the short term, citing a current return on investment for 2019 of over 100%, beating out every other asset class by a clear mile:

As we see stocks fall further, we’re likely to witness Bitcoin grow as a result. This has been a consistent talking point of broadcaster and Bitcoin propagator, Max Keiser, who - in a recent interview with Chepicap - suggested that BTC would prosper from a stock market collapse:

 “Is the stock market about to crash? ... I think the answer is yes, so Bitcoin would … make new all-time highs … there’s very little supply between $6000 and $10,000 so any amount of demand will take us to new all-time highs,” explained Keiser.  

A recession…

As stock markets around the world falter, and the global debt counter climbs ever higher, Bitcoin looks more and more appetizing to traditional investors; because it isn’t just the stock market that is in danger but the entire global economy…

Speculation around the next global economic disaster has been circulating for a few years, and a recent confluence of factors – such as the aforementioned US trade war with China -  have provided ample breeding grounds for a potential pullback from the economy.

Like many things, including both the stock and cryptocurrency markets, recessions seem to be cyclic, and everything points to another occurring sooner rather than later…

One person who prescribes to this theory is Mark Yusko – CEO of Morgan Creek Capital – who recently hit headlines for auguring a “shallow recession like 2001” come the end of 2019:

Yusko also noted that stocks are already in a bear market:

“it will only get worse,” said Yusko about the state of stocks, "I definitely say put your money on Bitcoin."

The 2020 Bitcoin halving

Let’s move slightly away from the doom and gloom of stock market crashes and potential economic downturn and face towards the slightly less depressing catalyst of a Bitcoin halving!

The block reward halving occurs ever 210,000 blocks, or approximately every four years, with the last halving taking place in 2016.

As BTC has a ceiling supply of 21 million, the reward halving acts as quasi-monetary policy, in place to avoid hyperinflation by limiting the circulating supply.

Historically block reward halving’s have correlated with a major bull cycle, so it’s no surprise that crypto aficionados believe that the momentous event will catalyse Bitcoin once again …

2020 marks the third such Bitcoin reward halving, and judging on the previous two, investors have every reason to get excited.

One user took this excitement to the next level and created a prediction model based on past halving’s to ascertain a potential price point post-event; suggesting that BTC could hit as high as $55K in May 2020.

Past occurrences of the halving appear to work cyclically, as one Redditor pointed out, with Bitcoin appearing to go through several phases including a bull market, bear market, an accumulation, expansion, and reaccumulation before circling around to a bull market once again:

  

According to this chart, we currently fall within the reaccumulation phase which will continue until the halving in may 2020, at which point the chart suggests a bull run will occur, taking BTC to newfound heights well above $140k…

So there we have it, several bullish catalysts that could expedite Bitcoin on its way to $100k.

Which do you think will provide the biggest catalyst for BTC? Let us know in the comments!

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