KEY POINTS
- Pantera Capital projected the price based on price behavior from previous Bitcoin halvings
- Bitcoin accounts for about two-thirds of cryptocurrency market value
- Institutional investors are showing more interest in Bitcoin and Ethereum
Analysts with investment firm Pantera Capital are expecting Bitcoin to hit $115,212 on Aug. 1. They say the benchmark cryptocurrency is following a pattern similar to the previous halvings.
Pantera Capital's stock-to-follow model, which plots the impact of Bitcoin halving events, has put the current price of Bitcoin just below its projected price line. Bitcoin halvings are technical events where the supply of coins issued per day is cut in half. Since its third Bitcoin halving event, only 9,000 BTC is issued per day.
The halvings would lead to a scarcity in the supply of Bitcoins on the backdrop of growing demand. Higher demand and decreasing supply would equilibrate at a higher price.
The impact of such halvings on the price would become evident only six months after the event. Previous halvings have tracked the same trajectories at the same time frames. According to Cointelegraph, the current price behavior is similar to the 2012-2016 market cycle. Hence, Bitcoin could reach $300,000-$400,000 by Aug. 4, which is around 450 days after the May 2020 halving.
While the 2017 rally is fueled by retail investors, the major drivers of the present rally are institutional investors who are now showing more interest in Bitcoin and Ethereum, Pantera Capital said.
As of Jan. 6, the market concentration of Bitcoin was at 72% and Ethereum was at 14%. In 2017, Bitcoin only commanded a 39% market share while Ethereum had a share of 12%. Panterra Capital said institutional investors have chosen the most established chains to enter the cryptocurrency market.
In the case of Ethereum, another factor is growing interest in decentralized finance, which requires Ether so that users can interact with smart contracts. According to DeFi Pulse, the total value locked in DeFi is now $24.4 billion. The value of ecosystem coins like AAVE and trading volume on automated market makers like Uniswap and Sushiswap is also growing.
How high -- and how low -- can it go? Bitcoin is a rollercoaster and not for the faint of heart investor Photo: AFP / INA FASSBENDER
