Bitcoin broke a new record last year, and that success is continuing into 2021. The popular cryptocurrency breached $50k with no signs of stopping. This prominence is causing many to consider investing in the world’s first cryptocurrency. So, with a massive price spike behind it, is 2021 the year to invest in Bitcoin?
Institutional Interest at an All-Time High
It’s worth noting that Bitcoin is still a young asset. That lack of market exposure is why many Bitcoin price predictions claim it’ll exceed $100,000 this year. Their logic? New institutions are now buying up Bitcoin in larger volumes and storing them off exchanges for longer-term investments.
PayPal’s openness toward Bitcoin made it easy for millions of people to easily invest in Bitcoin, Ethereum, and other cryptocurrencies. However, the payments company will also sustain its support as more users take advantage of this change. Crypto investors are certainly looking to profit off of the new companies enabling and supporting Bitcoin’s expansion.
Speaking of investors, institutional interest in cryptocurrency is higher than ever. Massachusetts Mutual Life Insurance Co. invested $100 million into Bitcoin this past December. Tesla invested $1.5 Billion in February 2021, Fidelity Investments has launched a Bitcoin mutual fund, and MicroStrategy now holds over 70,000 Bitcoin. In this same vein, the top 100 Bitcoin addresses have purchased almost 350,000 Bitcoin in December and early January. Of all the cryptos to invest in, enthusiasts believe one should invest in Bitcoin. Bitcoin’s market cap is nearly $1 trillion as of February 17, 2021.
“Fads don’t typically last 12 years,” says Wells Fargo’s head of asset strategy, John LaForge. There’s reason to believe him. Bitcoin is the most profitable investment in the last decade. As crypto market caps keep rising, more institutions will find cryptos to invest in due to their increased utility. That’s not to mention, crypto restrictions are finally loosening as well.
Regulatory Insight is Clearer Than Ever
In early January, the United States OCC, Office of the Comptroller of the Currency, allowed banks and other financial groups to facilitate payments using fiat and gold-backed cryptocurrencies (like some stablecoins. These institutions can also legally interact with blockchain networks, taking advantage of their power to conduct fast, cheap international transactions. Cryptocurrency enthusiasts praised the motion, and prices saw a spike up as well.
While cryptocurrency diehards might claim regulation is against the decentralized, autonomous nature of Bitcoin, some institutional investors will disagree. Many big holders have said they’re not investing in Bitcoin until regulations are clearer. That’s finally happening. As of now, cryptocurrency tax rates are difficult to parse. However, former acting comptroller of the currency, Brian Brooks, says clarity should come in the “next six-to-eight weeks.” While reassuring, his next statement puts it best: “Nobody’s going to ban Bitcoin. We’re very focused on getting this right. If the Comptroller of Currency sees something in Bitcoin, it may be a great time to add cryptocurrency to your retirement portfolio.
Bitcoin as a Hedge
The world is in a state of political strife due to high inflation and faith in the United States dollar is faltering, with the government printing money as it sees fit. This inflation has smart investors looking to hedge, and the solution for many has been investing in Bitcoin.
Considered by some to be a “digital gold,” Bitcoin’s volatility initially poises it as an asset unfit for hedging. However, when BlackRock CIO Rick Rieder says the digital asset could replace gold, investors tend to perk up. Rieder’s Bitcoin price prediction is simple – Bitcoin is much more functional than holding or moving gold. That, combined with the future generation’s affinity for technology, presents a potentially bright future for cryptocurrencies.
2020 has been one of Bitcoin’s most positive years. That said, 2021 could potentially top it. Regulatory insight, institutional interest, and the asset’s potential to hedge are exciting developments. Financial experts are prepping to double down on Bitcoin, and, while the asset is still speculative, now might be the year to get involved.
Are you considering investing in cryptocurrencies, like Bitcoin or Ethereum? Our Bitcoin IRA and 401k platform make it easy to buy, sell, and swap cryptocurrencies 24/7. We’re trusted by over 100,000 users, so you can have confidence that our services are regarded highly. Plus, our new Bitcoin IRA Earn program allows investors to earn up to 6% APY on their assets, including Bitcoin, Ethereum, and cash.
Recommended article: Crypto Price Predictions