Conflicting Predictions Regarding the Price of Major Cryptocurrencies
The financial crisis has led to people no longer trusting banks; recently, the outflow of deposits from banks has amounted to hundreds of billions of US dollars.
But not everyone prefers to keep withdrawn money in cash; many investors choose investing in cryptocurrencies as an alternative to deposits.
While forecasts for this type of asset are far from clear, some predict sky-high rates for major cryptocurrencies, while others predict the market will fall to a new low.
Currently, the price of Bitcoin is in the region of $30,000, and the second most popular digital currency, Ethereum, is approaching $2,000 per coin.
What are the positive forecasts based on?
The most optimistic forecast of the last month was the statement of Equity Management Associates investment fund manager Larry Lepard. He stated that the price of Bitcoin will reach $10 million by 2033.
His forecast is based on the imminent collapse of the US currency, which has forced people to look for alternative assets to store their savings.
According to him, the most popular options will be gold and Bitcoin, but unlike gold, the number of coins is limited to 21 million. Therefore, an increase in demand will certainly cause the price of this cryptocurrency to increase tenfold.
What adds to Bitcoin’s popularity is the fact that some large companies have also increased their investments in this asset. For example, the well-known Micro Strategy corporation recently bought $30 million worth of bitcoins.
Validity of negative forecasts
Some analysts, on the contrary, predict the price of the main cryptocurrency at $4,000 per coin, and well-known cryptocurrency skeptic Peter Schiff even predicts a drop to $1.
This forecast is based on the fact that cryptocurrency has no real backing and is quite susceptible to panic.
One has only to collapse another crypto exchange or introduce a ban on transactions using digital money, and the rate will fall like an avalanche.
Constant investigations regarding abuses in the cryptocurrency market also do not add optimism. The money that should be used to back cryptocurrency is regularly misused.
It should be noted that such forecasts are not without foundation; people will invest money in cryptocurrencies as long as they have something to invest.
If forecasts for a global crisis come true and the US dollar actually collapses, then the most popular assets will be futures , not virtual money.
A reasonable price for Bitcoin is 50-60 thousand dollars, but if Bitcoin costs 10 million dollars, then the dollar will depreciate so much that you can buy a cup of coffee for one million.
Therefore, we can recommend cryptocurrencies only as a means of diversifying investments, but you should not invest all your savings in this rather risky asset. Most financial analysts recommend keeping no more than 10% of your capital in cryptocurrencies.
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