Can Bitcoin Reach $100,000? | The motley fool

To say that Bitcoin (BTC -0.59%) has been broke in 2023 would be an understatement: The world’s leading cryptocurrency is up more than 70% so far this year as of April 20. This gain not only surpasses the technology-heavy one Nasdaq Composite Indexbut it is also a greater increase than Ethereumanother popular digital resource.

After surpassing the $30,000 mark, investors can think of a much bigger goal to set their sights on. Can Bitcoin Reach $100,000? While it may not happen this year, there is a very real possibility that it will happen within the next five. Here’s why.

All eyes on the Fed

Just at the time when the Federal Reserve indicated that inflation might not be so transient after all, Bitcoin peaked at nearly $69,000, in November 2021. Throughout 2022, as the central bank raised interest rates at the fastest pace in history, the digital currency took a beating , lost 65%, a much larger loss than the stock market and roughly in line with the overall cryptocurrency market.

Investors can gain a very important insight from this type of price action. For now, it is clear that Bitcoin is trading more like one growth technology stock, influenced by macroeconomic news such as recent inflation data or Fed actions. At the start of this year, risk assets have generally performed well, a possible sign that investors believe interest rate hikes will soon be over.

And Bitcoin has increased significantly since its inception regional bank failure more than a month ago. Perhaps investors also see this top digital asset as a safe and reliable holding amid the turmoil. While these catalysts may drive greater demand for Bitcoin, I don’t think they are enough to push the price to $100,000, especially in 2023.

Bitcoin as a store of value

However, these catalysts bring more attention to Bitcoin, which should benefit in the long term as more dollars flow in as well, despite the inevitable ups and downs. I think Bitcoin’s most compelling use centers on it becoming a more widespread store of value, which individual and institutional investors will drive. And the increasing number of businesses providing easy access to buy Bitcoin will make it more accessible to the masses.

But this begs the question: What fundamental reason is there that would make investors want to buy and hold Bitcoin for long periods of time? Bulls point to one thing and one thing only, and that is the fact that there will only ever be 21 million coins in circulation, an absolutely finite cap that should support a higher price many years from now. And in about a year, Bitcoin’s block reward for processing transactions will halve, usually a positive indicator for the price trajectory.

What’s more relatable is Bitcoin’s superiority as inflation continues to rise and governments around the world—including the United States—have historically debased their currencies. More dollars chasing fewer bitcoins bodes well for the latter’s future price. And while Bitcoin will not move in step with the CPI, its total return of nearly 48,000,000% (since July 2010, based on the earliest data provided by coinmarketcap.com) proves that it not only preserves purchasing power, but also raises it .

According to consulting firm McKinsey & Co., the total global net worth was more than $600 trillion by the end of 2021. This means that Bitcoin’s current market cap of $590 billion represents less than 0.1% of this astronomical value, even after its enormous value. run-up this year. This means that there is still a very long runway for the crypto to find itself in more portfolios.

To be fair, to get from Bitcoin’s current price to $100,000 in five years, there needs to be regulatory clarity, especially in the US, so that the country can lead the development of the global framework for this asset class.

More importantly, people just need to learn more about Bitcoin’s value proposition in the broader economic landscape. Once this happens, it’s hard not to be bullish.