With such rosy predictions, does the panel think that it’s time to buy, sell or hodl? It’s volatile, it’s a little scary, and above all else for crypto investors, it’s exhilarating. With all of the chatter about Bitcoin’s future, Bitcoin price predictions for 2021 are heating up to supernova levels. Long-Term Holder Realized Price rises when coins mature from increasingly higher prices as Bitcoin appreciates. The delay in adoption of this group makes their cost basis less responsive to price, and more beholden to maturation behavior by hodlers. Steep loss realization in the days afterward as price pulled back over -30%. A common behavior when prices make new highs is for profitable coins to be spent into market strength.
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Read more about Bitcoin Price here. Others still say that the coin is simply going through some growing pains on its way to $100,000. With so many holder types stacking BTC for the long term, future opportunities to acquire the world’s first absolutely scarce digital asset are increasingly limited. Price weakness has so far not engendered a rush to the exits, as investors are instead creating friction between their ownership and the ability to sell their BTC. High values over indicate moments of extreme profitability for new investors. A key observation in the Realized Cap HODL Waves is the compression of the 3m-6m wave, which are owners of coins bought between mid June and September— essentially the year’s lows. A squeezing of the 3m-6m band while the senior 6m-1y band bells outward shows coin maturation- as BTC lies dormant and accrues age, it graduates into the older cohort above. Bitcoin endured a second consecutive week of price ranging, following the sharp drawdown in early December.
Presently, Short-Term Holders finds themselves in aggregate loss, though the pace of decline has slowed along with price. While these coins continue to churn among different hands, their lifespans stay young and they remain members of Short-Term Holder Supply. Spending of profitable coins at the all-time high, realizing profits into market strength. Live ChartThis dynamic is also visible in the Realized Cap HODL Waves, which divvy up the circulating supply by their respective weighting in the Realized Cap, helping to emphasize recent spending. However, at the other end of the spectrum, Morpher CEO Martin Fröhler — who believes that the value of Bitcoin come the end of 2021 will hit US$250,000 — says BTC is the future. Coin Price Forecast thinks BTC can rebound and hit another all-time high before 2021 is over. The site was correct in that prediction, which leads into its second prediction of a lower price consolidation incoming. If miners evolve into being HODLers, a group who are naturally incentivized to spend, then acquiring new Bitcoin into the future could become exceedingly difficult.
The panel is similarly bullish on Ethereum, with almost three-fifths (59%) recommending that you consider buying ETH, a little over a quarter (28%) saying hold and just 13% saying that you should consider selling. While the year-end highs for ETH aren’t predicted to be as lofty as BTC, with the panel predicting that ETH will finish the year at $4,512, almost three-quarters (72%) think that ETH will hit 5 figures by 2025. Note the recent increase in Short-Term Holder Realized Price at the October and November highs, showing the re-pricing of coins at higher prices as new investors bought the literal top. Short-Term Holder PnL spiked dramatically in late October as price ripped to all-time highs. Buyers of coin from August and September suddenly found themselves up 60%+, and the market had to pull back to accommodate profit taking. A look at the standing Profit/Loss ratio of Short-Term Holders can show the health of this group’s supply and illustrate periods of overheated price action. It’s almost impossible to read the news or scroll through your timeline without a story about non-fungible tokens popping up. And it’s this self-sustaining attention that our panel believes is driving interest in NFTs.
Holders from lower prices want to pay themselves for the effort of waiting and taking on risk, and it results in profit taking and elevated activity from older coin cohorts. Live Workbench ChartIn case you missed it, the past week saw circulating supply pass the 90% mark of its ultimate goal, with circulating supply passing 18.9M BTC. In just under thirteen years, 9/10ths of the total BTC supply has now been issued to miners. Bitcoin’s deterministic issuance schedule has much farther to go however, with the remaining 10% of supply set to be minted over the next 119 years or so, ending somewhere near the year 2140. Live Workbench ChartStrong hands are not the only investors pulling coins away from potential buyers. After a large impulse of deposits to exchanges in May (over $300M on a 14-day basis), Bitcoin has been steadily pulled offline into cold storage in the months following the summer lows. The supply in possession of these Illiquid entities sold off in May along with much of the market. Since that time, they have maintained a consistent pressure of accumulation, and are now taking possession of coins at a rate of 3.4x daily coin issuance. That means they were coins mostly purchased since July, and signals that the current holder makeup is top heavy— many coins were bought at the top and now sit underwater.
Now in late December, price is $47.6k (over $15k higher) and there are again only 76% of entities in profit. When new highs were created in October and November, 100% of entities were in profit— an expected outcome of price discovery. In late July, price was $32.3k and 76% of all entities on-chain were in profit. Long-Term Holder Realized Price declines rarely, and typically only in prolonged bear markets. Rather than fall, it tends to go sideways as coins mature during long ranging periods for price. Get smarter with context and commentary on the week’s top blockchain & crypto trends in Asia. That figure is a far cry from the average of US$51,951, which the panel forecasted for Bitcoin at the end of 2021 back in December 2020. Keeping with the bearish trend, it predicts BTC to fall to around $32,000 before any significant rebound.
Fred Schebesta is a co-founder of Finder, a global personal finance comparison website. Fred also spearheaded the group’s venture capital arm, Finder Venture and led the launch of cryptocurrency brokerage HiveEx.com in 2018. Fred’s honors and accolades include LinkedIn Top Voices of Australia 2020, Australian Financial Review’s Young Rich List 2019 and 2020, and Blockchain Australia’s Entrepreneur of the Year award in 2019. Looking further down the road, our panel believes that Bitcoin will end 2025 with an average price of US$360,179. Just over a third (35.71%) of respondents say that BTC will end 2025 with a valuation of $500,000 or more, and about 1 in 7 (14.29%) say that the price will reach US$1 million. The current dip aside, what are Bitcoin and Ethereum’s longer-term price forecasts? Put another way, strong handed HODLers are absorbing supply at more than triple the rate of new coins being mined each day. Live ChartAs a cherry on top of the discussion about top heavy supply, we look at the Unrealized Price Distribution, which shows all circulating BTC by its last transacted price. A quick glance reveals that 24.6% of all supply is sitting above the current price around $47,000, meaning 1 in 4 BTC is currently underwater.
Even with the pandemic, there are now more than 11,000 cryptocurrencies in existence, up from about 6,000 in 2020, according to the website CoinMarketCap. “Nothing is too big to fail,” says Niederhoffer, a former neuroscientist, “but I suspect Bitcoin’s biggest critics have never used it to perform a transaction.
Almost three-quarters (74%) of panellists say that new crypto millionaires drove NFTs into the limelight and generated headlines by for certain NFTs, sparking a gold rush of people wanting to cash in. What once was a reliable outflow of spending from miner wallets has shifted since 2019, and miners are now depositing more minted supply into their treasuries than before. The chart below shows the 90-day sum of Miner Netflow Volume as a percentage of Market Cap, and the multi-year rise is evident. Newer, more powerful chips have enhanced operational efficiency, and the expansion of miners into North America has given many of them access to operating capital by exercising cheap debt and corporate equity. Coins from higher prices are re-priced into new hands at lower costs, pulling down their cost basis. Relatively flat activity in the past two weeks, suggesting investor interest is reaching an exhaustion point at current prices.
Consistent profit taking around the all-time highs, as coins from lower prices are spent to new buyers. In the days following the November all-time high and beyond the liquidation flush of December 4, loss realization on-chain of $50-$100M per day was common. For loss realization to occur after an all-time high, those spenders must be top buyers. And yet, it’s still on track to beat its best bull market ever, and it is showing strong fundamentals that make it an attractive player for miners even with its rampant power consumption. Short-Term Holder Realized Price rises when coins are spent from lower prices, causing them to be re-priced higher and thus raising the aggregate cost basis of the group. Bitcoin investors are increasingly underwater, with 1-in-4 coins held at an unrealized loss. We analyse this top heavy market and what it means for sentiment moving forward.
In lockstep with the growing of the older 6m-1y group, is a rise in the youngest bands in October and November at the market all-time high. This behavior shows older coins being spent, which resets their lifespans to zero. Based on the squeeze of the 3m-6m band (and the 1m-3m band to a lesser degree), much of the recent spending emanated from these medium-term holders. The chart below shows the net transfer volume to/from all exchanges, which is the difference between all deposits and all withdrawals in USD terms. Distribution events, visualized below as the 7-day change in Long-Term Holder Supply, typically result in peaks of 2% or more supply moved to new buyers. However the recent all-time highs and subsequent pullback have seen a peak spending rate of only 0.6%, just 30% of the expected amount from Long-Term Holders. These low time preference investors seem reticent to spend at current prices, which may speak to a sophistication in their decision making. The take home message here is that much of the coin spending underway appears to be from coins purchased in the last 3m-6m, rather than longer-term holders.
After opening at $50,093, price saw a high of $50,186 and a low of $45,671, a compressed range that spanned only $4,515 ,with BTC closing out the week down -6.1%. “Bitcoin is the ultimate long term store of value and will gradually replace gold and bonds in that role,” Fröhler said. Not only that, but the panel thinks that BTC could crack US$100,000 before the end of the year. On average, the panel thinks the digital currency will peak at a whopping US$107,484 at some point during 2021. The billionaire entrepreneur has dealt an unexpected blow to the crypto play that has many wondering if it will be able to pick itself up. The blow comes in the form of a series of tweets, calling into question Bitcoin’s power consumption. By the time price peaks and rolls over, Long-Term Holders have begun net accumulating again. Steady accumulation in bearish market phases, eventually reaching a level of ‘Peak HODL’.