Bitcoin investors, which include top hedge funds and money managers, are betting the virtual currency could more than quintuple to as high as 100,000 in a year.
Its a wager that has drawn eyerolls from skeptics who believe the volatile cryptocurrency is a speculative asset rather than a store of value like gold.
Since January, bitcoin has gained 160, bolstered by strong institutional demand as well as scarcity as payment companies such as Square and Paypal buy it on behalf of customers.
Bitcoin is within sight of its alltime peak of just under 20,000 hit in December 2017. It debuted in 2011 at zero and was last trading at 18,415.
Going from 18,000 to 100,000 in one year is not a stretch, Brian Estes, chief investment officer at hedge fund Off the Chain Capital, said.
I have seen bitcoin go up 10X, 20X, 30X in a year. So going up 5X is not a big deal.
Estes predicts bitcoin could hit between 100,000 and 288,000 by end2021, based on a model that utilizes the stocktoflow ratio measuring the scarcity of commodities like gold. That model, he said, has a 94 correlation with the price of bitcoin.
Citi technical analyst Tom Fitzpatrick said in a note last week that bitcoin could climb as high as 318,000 by the end of next year, citing its limited supply, ease of movement across borders, and opaque ownership.
Those numbers though are a headscratcher for Torontobased Kevin Muir, an independent proprietary trader.
Any hedge fund model on bitcoin is rubbish. You cant model…