Why Bloomberg says Bitcoin could hit $400K this 2021, as a ‘risk-off reserve currency,’

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According to Bloomberg Intelligence, with organisations demanding protection against inflation and dollar deflation, historical dynamics may see BTC/USD 8X from current rates.

Bitcoin (BTC) is still blamed for being too risky, but one Bloomberg analyst claims it is becoming a “risk-off” investment choice for investors.

Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said in a tweet on March 25 that this year was a landmark moment for the largest cryptocurrency.

$400,000 BTC would “rhyme” with history

McGlone uploaded a chart of the BTC/USD average price and the Bitcoin Liquid Index, a price ticker specially created for institutional use.

“Well on its way to becoming a global digital reserve asset, a maturation leap in 2021 may be transitioning Bitcoin toward a risk-off asset, in our view,” he wrote.

A potential price peak this year, with previous behavior as context, could be as much as $400,000 per coin, the chart shows. This dwarfs other estimates, such as that of stock-to-flow, which calls for an average of $288,000 between now and 2024.

BTC/USD price indices chart. Source: Mike McGlone/ Twitter/ Bloomberg Intelligence

Although McGlone did not go into specifics on the reasons that led to Bloomberg’s conclusion, the notion of Bitcoin minimising rather than raising portfolio risk is the talk of the year among corporates. Fresh announcements of treasury allocations to BTC emerge on a daily basis, with demand untouched by market fluctuations.

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“My mission right now is to fix the balance sheets of the world,” Michael Saylor, CEO of MicroStrategy, one of the largest Bitcoin treasury investors, said in an interview with TIME this week.

Saylor began a movement among public companies last summer that has seen over $52 billion transferred to BTC on a cost basis, and is now worth more than $73 billion, according to the tracking resource Bitcoin Treasuries.

What risk?

Ahead of Morgan Stanley becoming the first major bank to open up access to Bitcoin funds for high net worth investors next week, however, naysayers continue to peddle familiar arguments against exposure.

“Morgan Stanley limiting crypto access to 2.5% of high net worth individual accounts, that have over $2 million in assets and have been active for over six months, shows that the bank realizes Bitcoin is very risky and wants to limit legal liability from investors who lose money,” gold bug Peter Schiff recently claimed.

Meanwhile, Fed Chair Jerome Powell likened Bitcoin to a “substitute” for gold, to Schiff’s displeasure, but added that it did not pose a risk to the dollar or to financial stability.

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As reported before now, average returns for BTC/USD have topped 200% every year since the cryptocurrency’s inception.

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