Bitcoin is in new uncharted territory, surpassing the $72,750 mark for the first time ever in Monday trading, before sliding down to just shy of the $72,000 mark, according to Coin Metric.
US business media says SEC-approved ETFs are responsible for the flagship cryptocurrency’s spike in value as institutional investors pour into the market. Following the SEC’s lead, the UK’s Financial Conduct Authority on Monday announced that it too would allow crypto-linked funds on the London Stock Exchange.
Bullish investors say the sky’s the limit on the cryptocurrency, with British multinational bank Standard Chartered predicting a price spike to $100,000 by the end of 2024, while NYC-based hedge fund SkyBridge Capital expects Bitcoin to reach $170,000 territory a year from now. Meanwhile, Florida-based investment manager Ark Invest believes the cryptocurrency could hit a dizzying $1.3 million per coin a decade from now due to its perceived “store of value” against inflation, its use as a decentralized payment tool and independence of central banks and government control.
Traditional money managers have long eschewed the cryptocurrency, pointing to its ethereal quality and the fact that the coin has value almost solely because of investor confidence, with its original use as a decentralized currency of exchange becoming secondary at best.
“Now that the Bitcoin ETFs have been pretty much approved by the SEC, it provides a vehicle that institutional money can get into. And that opens the door among Western investors primarily of where to put their money,” Paul Goncharoff, chief manager of consulting firm Goncharoff, LLC, told Sputnik, commenting on the Bitcoin boom.
Investors are “looking at the stock market these days, the valuations, and they’re a bit in shock. They’re feeling fear. They’re looking for something else to generate a better return. The problem is, there’s an expression called ‘FOMO,’ or ‘fear of missing out.’ And right now, if we’re looking at the Greed and Fear Index, which is monitored daily, it’s well over 95. Which in any trading book is a highly overbought position. So I have a feeling that it’s not going to last. It could go higher – no one’s a magician, you can’t tell the future. But I think that the excitement should calm down in the next few days, and it could calm down rather significantly,” Goncharoff said, adding that Bitcoin could easily drop to $60,000 and below over the short term.
The analyst said he personally wouldn’t recommend investing in Bitcoin at its current valuation, and that any first-time investors interested in doing so should follow a simple but important rule: putting in money that they would not miss not having over a set period of time. Another important rule? Setting limits and having self-control.
“Set the limits of what you want to earn – if it’s 5%, 10%, 20% – and act on it. That is discipline. Because it’s going to go up and it’s going to go down, and violently and radically. So it’s not for a pension plan. Although hanging on to it for a period of five, 10, 15 years, I think is a rather good bet – then you will come out ahead,” Goncharoff said.
Investors’ search for alternative stores of value and payment methods are logical, according to the analyst, given the “weaponization of the dollar” and the targeting of countries whose foreign or domestic policies aren’t approved by Washington.
“It’s country after country. Dozens are already seeing that. And they’re trying now to get out from under the cloud of the dollar and find alternative means, be it their own national currencies, trading cross-border as is being tried within BRICS and BRICS+,” Goncharoff explained.
“This whole de-dollarization process is forcing countries to look very closely at the US dollar and the US Treasury, the Federal Reserve and what they’re doing. Using an old expression, [the dollar] is not worth the paper it’s printed on. The debt load cannot be serviced, [with] interest rates that are larger than America’s defense spending. This can’t last for long. I wouldn’t venture to say how long it will last, but eventually it will implode. So better to be far away from it when it does,” Goncharoff summed up.
The US national debt recently surpassed the $34.5 trillion mark, with analyses of current trends showing debt rising by $1 trillion about every 100 days. America’s debt load has also accelerated. In January 2020, just before the pandemic and the pumping of over $5 trillion in "stimulus" into the economy, the Congressional Budget Office predicted that the gross federal debt would surpass the $34 trillion mark only in fiscal year 2029.