Even the skeptics cannot avoid weighing in on bitcoin. It seems like everyone is coming up with a price forecast these days, with some of the biggest banks including Goldman Sachs Group Inc jumping into the action, while speculators to long-time investors are also making their bets.
The consensus is that the biggest cryptocurrency will face some resistance around US$4,500 to US$4,800 and correct, to then continue rallying.
Pantera Capital Management vice president Paul Veradittakit, Fundstrat Global Advisors’ Tom Lee and GFI Group Inc’s John Spallanzani see it going to US$6,000 by year-end, while Ronnie Moas at Standpoint Research says it could keep rising to US$7,500 next year.
Bitcoin has been on a tear this year, more than tripling in value as it crossed the US$4,000 mark and touched a record US$4,477 last week. It has since retreated about 7 percent from the high as investors took profit and assessed whether the rally had gone too far.
Growing adoption and institutional investor interest, agreement on a mechanism to speed up transactions and regulatory steps that will help the asset broaden its reach are some of the reasons that explain the gains.
“We’re in a very healthy position right now,” Veradittakit said, whose company has invested in bitcoin since 2014. “There’s a lot of interest from traders and mainstream finance on the rise of all these new crytpocurrencies, but when they first get exposure into the space, they’ll go into bitcoin. It has the most liquidity and biggest brand name.”
Veradittakit said bitcoin will hover around current levels and rally further once the underlying technology is upgraded in November, when the block size in the bitcoin blockchain is set to double to 2 megabytes, increasing transaction speed.
He is also encouraged by reports from the local exchanges Pantera invests in that cross-border transactions are increasing.
However, the road ahead might get rocky. Goldman Sachs technical analyst Sheba Jafari wrote in a note to clients Aug. 13 that bitcoin could erase about 40 percent of its value after reaching US$4,827.
On a separate note, Goldman Sachs analysts said the space is getting big enough at over US$100 billion in market capitalization that it warrants watching.
Spallanzani, GFI Group chief macro strategist, also predicts a sizeable fall to as low as US$3,000 unless it manages to break the US$4,500 level it tested last week. However, then it should rebound and climb to as high as US$10,000 next year, he said.
“It will have to retrace a bit more before we have enough power to break through,” Spallanzani said.
He recommends buying bitcoin when it is above US$3,800 and selling when its below that level.
Not everyone is so bullish. Goldmoney Inc founder and chief executive officer Roy Sebag, who said he first invested in bitcoin in 2011, said he sold most of his 17,000 bitcoin between May and June because he believes the long-term value will be zero.
“It’s completely devolved from the original promise,” said Sebag, whose comany oversees about US$2 billion of assets. “Bitcoin and cryptocurrencies in general are exhibiting a mania, fueled by speculative fervor.”
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