As Bitcoin embarks on a new rally, several crypto players project the asset will hit new record levels by the end of the year. Data provided by cryptocurrency trading simulator Crypto Parrot notes that 65% of 55 crypto hedge funds predict that Bitcoin will trade between $50,000 and $100,000 by the end of 2021.
The hedge funds that participated in a survey saw 21% put Bitcoin’s end-year price at between $100,000 to $150,000. Despite Bitcoin undergoing a short-term rally, only 1% of the hedge funds predict the asset’s price to trade below $50,000. The survey was conducted in Q1 2021 by Elwood Asset Management, targeting 55 hedge funds representing about 30% of all crypto hedge funds.
Elsewhere, another 63% of the hedge funds believe the cryptocurrency market capitalization to hit a value of between $2 trillion and $5 trillion. About 21% predict the market cap to range between $1 trillion and $2 trillion by the end of the year. Another 11% put the market cap at between $5 trillion to $10 trillion, while 2% project upwards of $10 trillion.
Possible reason reasons behind Bitcoin’s bullish projection
Most of the hedge funds remain bullish with the conservative price prediction at $100,000. At the start of the year, Bitcoin was on a bull run targeting the value of $100,000 amid an influx of institutional investors.
As the crypto market continues to mature, the sector is also likely to continue attracting more institutions. An inflow of institutional money will further propel the asset’s market capitalization. Notably, more institutions are attracted to the sector amid reducing volatility.
Despite the asset correcting by almost 50% from the $64,800 record price, Bitcoin has shown resilience. The asset faced swings of volatility amid increasing regulatory concerns from regions like China. However, the asset is on a short-term rally, trading at $48,651. The resilience is viewed as a key driver towards record levels considering the asset is regularly faced with negative press.
Furthermore, Bitcoin will likely record an increase in use cases, especially from a payments perspective. Bitcoin got more exposure recently after El Salvador became the first country globally to declare the asset a legal tender. Notably, several South American countries are expected to follow suit with the digital currency increasingly being viewed as a hedge against inflation and monetary debasement.
However, despite the bullish projection, Bitcoin still faces an uphill task due to regulatory uncertainty. Notably, Bitcoin has increasingly become under the radar of regulators due to the asset’s ability to aid vices like money laundering and terrorism.
Previously, Bitcoin price has plunged before in the wake of negative regulatory news.