Price targets have varied greatly with experts but many see $50,000 this year.
With a market capitalization of just above $500 billion, cryptocurrency volatility is nothing unusual, portfolio manager Jeet Singh told RT at the Davos Economic Forum in Switzerland.
Singh has been operating in the cryptocurrency space for the past 6 years and claims it is common for virtual currencies to fluctuate by 70 – 80 percent or even more.
At the moment there’s a speculative bubble in the cryptocurrency market because those who “got there at very late stages are losing money.” But it doesn’t bother those who’ve been there for a very long time because they are used to the volatility, Singh explained.
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“If you look at Microsoft or Apple when they went public their stocks were very volatile because the market wasn’t mature,” he said.
Currently cryptocurrencies are used more like a store of value, Singh said, adding that people tend to hold currencies which are deflationary and have more value over time. “There are not so many vendors right now who accept cryptocurrencies but there’s huge adoption on the black market.” In countries which have huge inflation like Indonesia and Thailand, people are now accepting cryptocurrencies. There’s also a high rate of adoption among coffee and tobacco farmers.
“In different countries bitcoin is qualified differently,” he said. It is a commodity in the US, a currency in Switzerland “but to me it’s more than a currency.”
Singh predicted “bitcoin could definitely see $50,000 in 2018” despite the fact that “we will probably go through a suffering period of volatility.”
The price of bitcoin, which has been taking a beating since the start of the year, could still rise significantly and reach between $50,000 and $100,000 by the end of 2018, according to Saxo Bank analyst Kay Van-Petersen.
“First off, you could argue we have had a proper correction in bitcoin, it has had a 50 percent pull-back at one point, which is healthy. But we have still not seen the full effect of the futures contracts,” he told CNBC.
Van-Petersen correctly predicted bitcoin’s rally at the start of last year, forecasting in December 2016 that the cryptocurrency would reach $2,000 in 2017. The digital currency, which at the time was trading below $900, blew past the $2,000 figure in May.
“Ethereum came after bitcoin, it has a more unified leadership than bitcoin,” he said. “They seem to be a bit further along the way in regards to forming the solution to scaling issues. And you can see transactions on their side eclipses transactions across other cryptos.”
A noted bull who owns various cryptocurrencies, Van-Petersen said bitcoin will be driven by a larger uptake of institutional investors and futures contracts. It tends to trade around a certain level then “re-rates,” he added.
“I wouldn’t be surprised if it’s something we are seeing. It’s kind of building a foundation, then will re-rate a bit higher.”