Bitcoin (BTC -0.03%) has traded more like a growth tech stock in recent times, as its price continues to be volatile and moves along with the ebbs and flows of investor optimism and pessimism. The top digital asset is down 60% from its all-time high from November 2021, like many speculative assets, but things could be taking a positive turn.
Bitcoin is already up 70% so far in 2023 (as of the afternoon of March 22), while the tech-heavy Nasdaq Composite Index is up 12%. Can the world's most valuable cryptocurrency reach $100,000 this year? Let's take a closer look at whether this lofty goal is attainable in the next nine months.
Hitting the 6-figure mark
Based on its current price of roughly $27,000, a $100,000 price target implies a 270% gain between now and the end of the year. In the grand scheme of things, this kind of monster return isn't completely out of the question. In 2020, Bitcoin's price soared by 309%. And before that, the crypto's price skyrocketed 1,300% in 2017, the year when blockchain technology had its coming-out party. However, $100,000 would be a new all-time record for Bitcoin.
There are some notable near-term catalysts that could lift the price to new heights throughout the year. The first development that immediately comes to mind is the collapse of SVB Financial's Silicon Valley Bank. This troublesome situation shines a light on just how complex, opaque, and risky the current banking system is, even after the laundry list of reforms that were put in place following the Great Recession. It's a real worry that even the Federal Reserve couldn't see this coming. Bitcoin's focus on self-custody and being a bearer asset owned fully by the owner, as well as the fact that it is not controlled by any single authority, illustrates that a financial tool like this is necessary. And this could drive more people to want to own it.
Some people believed that, because of the regional banking crisis, the Federal Reserve would pause rate hikes until the dust fully settled. But Fed Chair Jay Powell just announced a 25-basis-point hike, clearly demonstrating that fighting inflation is still the top priority. We will have to wait and see how the fallout from the banking crisis plays out, but there is a belief that the central bank will have to cut rates before the end of the year. An accommodate stance is generally a bullish indicator for risky assets, Bitcoin included.
And finally, Bitcoin is set to undergo a key event in the spring of 2024 called a "halving." This reduces the award that miners receive for approving transactions, effectively cutting the new supply of Bitcoin that enters the market in half. Throughout its history, Bitcoin's price has moved higher before and after a halving takes place. While past performance is never a true indicator of future results, this bodes well for the cryptocurrency's price action in the near term.
Adopt a long-term mindset
It would certainly be great for Bitcoin holders to see the price reach the six-figure mark by year-end, but it's anyone's guess if this will actually happen. To be clear, I don't think anyone possesses the foresight to be able to accurately predict what will happen with markets or the economy next month, quarter, or even year, no matter how convincing a person might sound. There are simply too many variables at play, meaning that anything can happen.
At a high level, though, the bullish argument for owning Bitcoin hasn't changed. This asset has the potential to continue being adopted on a greater scale as a legitimate store of value. Consequently, as more money moves from traditional asset classes to Bitcoin, its price is set to rise. It's that plain and simple. And this won't happen in one year. This thesis could take decades to play out. But it starts with individuals and institutions learning more about Bitcoin and its value proposition, as well as a clearer regulatory framework in the U.S. So don't hold your breath.
For what it's worth, I think Bitcoin will reach $100,000 one day. I just have no idea when that is.