Bitcoin has broken through the $24,000 mark. Can it continue its crazy rise in 2021?

In December of this year, the trading price of Bitcoin exceeded $24,000, setting a record high, continuing the crazy rise in 2020. When the public health incident broke out in the United States in March of this year, the price of Bitcoin was less than $4,000.
Although the price of Bitcoin fluctuates greatly, it generally shows an upward trend. For a currency with only a 10-year trading history, 2020 has been a fruitful year. So, how will Bitcoin perform in 2021? James Ledbetter, editor of the financial technology newsletter FIN, recently published an article predicting the key development trends of Bitcoin in 2021.
1. Be accepted by more mainstream
There has always been a chicken-and-egg problem with Bitcoin’s use in everyday life: few people use or accept Bitcoin, and the main reason is that few people use or accept it.
But in 2020, the acceptance of Bitcoin has undergone a surprising change. From Square (SQ.US) investing $50 million in Bitcoin to PayPal (PYPL.US) allowing users to buy and sell Bitcoin, well-known financial technology companies have recognized Bitcoin.
Ledbetter believes that we may see more mainstream acceptance of Bitcoin in 2021. At least one major bank in the United States or Europe will announce the launch of some kind of Bitcoin purchasing system or agree to hold digital assets for customers.
2. Competition from Big Tech Companies
Whatever Bitcoin has accomplished in its decade of existence, it has forced many large global entities to consider offering an international digital currency .
Every company involved in the payments space knows there is still room for growth in the digital payments market, with payments involving different currency markets showing the most potential, as such transactions currently take days to complete and often involve high fees.
Although still in its infancy, Bitcoin has demonstrated that a global digital currency could greatly simplify this process. This year, Facebook (FB.US) and Google (GOOG.US) both launched major digital currency plans.
Facebook-sponsored cryptocurrency Diem is not exactly the same as Bitcoin, but if they start to gain popularity in 2021, it could have a certain impact on Bitcoin's growth.
3. Competition from central banks
This year, a survey report released by the Bank for International Settlements (BIS) showed that 80% of central banks around the world are studying some form of digital currency.
China has gone further than any other country in experimenting with digital currency. In December, the results of the Suzhou digital RMB red envelope lottery were announced. This time, Suzhou issued 20 million yuan in digital RMB consumption red envelopes to eligible citizens, each with an amount of 200 yuan (about 30 US dollars), and the number was as high as 100,000. These residents were encouraged to connect the digital cash to their bank accounts, and if they did not spend the digital cash within a few weeks, the digital cash would disappear.
Ledbetter said that as China's digital yuan is rolled out across the country, demand for Bitcoin and other independent cryptocurrencies may decline. Similar trials may be seen in other countries next year.
4. A new regulatory environment
President-elect Biden's administration will have more important priorities than regulating cryptocurrencies within its first 90 days in office, and the U.S. Congress's attitude on the issue is unpredictable.
It’s natural to assume that a Democratic administration would regulate more strictly than a Republican one, but some assert that a Biden presidency would be “good for crypto.”
Ledbetter noted that Bitcoin enthusiasts often overlook issues such as the anonymity of cryptocurrencies and their potential for fraudulent use, which are very serious issues for regulators.
Biden’s team will likely come up with a more comprehensive and rational way to regulate cryptocurrencies, but Ledbetter doesn’t think they will favor Bitcoin in particular.
5. Continued turbulence
Because Bitcoin’s value is not directly tied to any obvious real-world phenomenon (like fiscal or monetary policy), it can appreciate or depreciate in ways that are difficult to predict or even explain.
This characteristic makes Bitcoin difficult to attract as an investment for investors who want to avoid huge losses. Some believe that the price of Bitcoin could be as high as $50,000 next year, and although this seems a bit extreme, it is not impossible if investors move funds from other assets to Bitcoin.
Ledbetter warned that Bitcoin prices could also move in the opposite direction in 2021. One thing seems certain, that is, the crazy journey of 2020 will be repeated, and investors need to be cautious. (Penguin)