Crypto Investing Strategy: Bitcoin to $100,000


  • The price of bitcoin has risen sharply from $48,000 to $57,000 this month.
  • Digital asset manager CoinShares said institutional crypto adoption could be imminent.
  • Insider lists CoinShares’ 3 areas to watch, as bitcoin approaches its all-time high of $64,000.

Bitcoin appears to have embarked on its latest bull run in a volatile, but successful 2021. In October alone, prices have surged from $48,000 to $54,000, as the cryptocurrency approaches its previous all-time high near $65,000, which it reached in April this year.

Institutional adoption would help bitcoin to surpass that landmark and make a run towards $100,000, according to a new report by CoinShares. The digital asset manager identified three factors that could help to push bitcoin’s price into six figures.

“Many have been speculating whether the recent technical analysis suggests [bitcoin] is setting up to push past the previous all-time high of $64,000,” a research team, consisting of associate director Alex Laughton-Scott and investment strategist James Butterfill, said. “What we consider to be more important is that there are a number of material factors in the digital asset industry that have not co-existed until now.”

“Together these lead us to the question of whether we may be on the cusp of institutional adoption,” they added.

This year, financial institutions including Visa, Paypal, Morgan Stanley, and Bank of America have upped their involvement in the cryptocurrency space. Laughton-Scott and Butterfill said this could point to an impending surge in bitcoin adoption.

“Coming towards year-end, it is clear there are a range of potentially price-supportive events,” they said. “These factors are beginning to tick all the boxes for greater institutional investor participation in the asset class.”

Insider breaks down the 3 factors that CoinShares say could trigger increased institutional involvement and a price run past bitcoin’s all-time high to $100,000.

Regulation

US regulators appear to have softened their stance on bitcoin in recent weeks.

Federal Reserve
Chair Jerome Powell and SEC head Gary Gensler both said they do not intend to follow China’s lead in banning cryptocurrencies on September 30 and October 5, respectively.

“The world looked to the United States for clarity from the regulators and lawmakers over their stance towards cryptocurrencies,” CoinShares’ report said. “A picture is beginning to emerge that the world’s most influential regulator is starting to warm to crypto (within reason).”

The asset manager also cited recent reports the SEC could approve a bitcoin futures exchange-traded fund as early as October 18. This would grant institutional investors access to a $51 billion market that has surged 236% year-on-year.

“There has been a lot of optimism about relying on futures markets to launch the first ETFs,” Laughton-Scott and Butterfill said. “Should the SEC approve a bitcoin ETF for the first time, institutional investors will take comfort from a proverbial greenlight, with many expecting investor flows into the space to follow.”

Adoption

Laughton-Smith and Butterfill compared bitcoin to the early days of the internet.

“Both supporters and detractors have recently been likening bitcoin to the internet in 1997,” they said. “Bitcoin has been growing at an annual rate of 113%, versus the internet’s growth at that time of 63%.”

They pointed out that, even if bitcoin’s adoption rate slowed towards that 63% level, the token would still have 1 billion users by 2024 and 4 billion by 2030.

El Salvador’s adoption of bitcoin as legal tender triggered an initial global sell-off, but CoinShares said the Central American nation was leading the way in encouraging other countries to legalize cryptocurrencies. An estimated 50% of El Savadorans are now using the government’s Chivo crypto wallet, exceeding the 30% with access to traditional bank accounts.

Chivo El Salvador

People queueing to use a Chivo bitcoin ATM in Chalatenango, El Salvador.

Camilo Freedman/Getty Images


“There has long existed a narrative that cryptocurrencies can provide a solution to banking the unbanked,” Laughton-Scott and Butterfill said. “Approximately 1.7 billion people remain without access to a bank account, however 1.1 billion of those own a mobile phone.”

The CoinShares research team cited Brazil, Cuba, Paraguay, and Ukraine as other countries that could soon legalize bitcoin and other cryptocurrencies.

Inflation

Wall Street firms are beginning to worry about inflation and ‘stagflation‘, which is a combination of sustained price rises and sluggish economic growth. The US annual inflation rate is sitting at a 30-year high of 5.3%.

Investors have traditionally bought gold as a hedge against inflation. However, CoinShares data indicated bitcoin increasingly represents an alternative ‘store of value’ commodity.

“Investment fund flows imply that bitcoin has begun to cannibalize gold’s market share,” Laughton-Scott and Butterfill said. “We have recently seen Gary Gensler acknowledge that bitcoin is now ‘a store of value’, which further establishes its identity as a real asset.”

Bitcoin currently represents 9.1% of gold’s market share. If that figure rose to 17%, bitcoin would hit $100,000 in a scenario CoinShares described as “not outlandish.”



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