Fasten your seat belts! Analysts predict Bitcoin will continue its wild ride in 2021

Source: Huitong.com

2020 has been a thrilling year for anyone who has invested in Bitcoin or even just paid attention to it. Just in December, the price of Bitcoin, the world's most valuable virtual currency, once exceeded $24,000, setting a record high. On December 22, market analyst James Ledbetter predicted that Bitcoin may be more accepted by the mainstream in 2021, but it will face competition from large technology companies and central bank digital currencies, as well as stricter regulation from the Biden administration, and Bitcoin may continue to be volatile in 2021.

Experts predict five major trends for Bitcoin in 2021

Back in early March 2020, when the United States first began to deal with the epidemic, the price of Bitcoin was less than $4,000. As Bitcoin soared, investors made huge profits. For onlookers, it was a market show with a little envy and dizziness.

Despite Bitcoin's wild price swings -- generally trending upward -- 2020 has also been a relatively mature year for a currency that has only been trading for 10 years. Market analyst James Ledbetter said that from his perspective as editor of a fintech newsletter, he sees the following five key trends for Bitcoin in 2021:

① More acceptable to the mainstream

Bitcoin has always had a chicken-and-egg problem when it comes to everyday use: few people use or accept it.

But in 2020, Bitcoin's adaptability has changed dramatically. From Square investing $50 million in Bitcoin to PayPal allowing users to buy and sell Bitcoin, well-known financial technology companies have given Bitcoin their stamp of approval.

We may see greater mainstream acceptance of Bitcoin in 2021. At least one major US or European bank will announce some sort of Bitcoin purchasing system or agree to hold Bitcoin for its customers.

② Competition from large technology companies

Whatever Bitcoin has accomplished in its 10 years 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 offering the greatest potential. This is because currently such transactions take days to settle and often involve high fees.

Bitcoin has demonstrated that a global digital currency could greatly simplify this process, albeit in its infancy. In 2020, Facebook and Google—two companies with massive global reach that Bitcoin can only dream of—both launched massive digital currency initiatives.

Tech products like Facebook's Diem aren't exactly the same as Bitcoin, but if they start to gain popularity in 2021, they could have some impact on Bitcoin.

③ Competition from central bank digital currencies

In 2020, a report and survey released by the Bank for International Settlements showed that 80% of central banks around the world are studying some form of digital currency.

There are already Asian countries trying to advance the development of digital currencies, which could weaken demand for Bitcoin and other independent cryptocurrencies. In 2021, other countries may also try to advance digital currencies, which is not good news for Bitcoin.

④A new regulatory arena

The Biden administration will have more important priorities within its first 90 days than regulating cryptocurrencies. Of course, it is difficult to decipher the attitude and expertise of the U.S. Congress on this issue.

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.”

That may be true, but Bitcoin enthusiasts often overlook issues such as anonymity and its potential for fraudulent use. These are serious concerns for regulators.

Biden's team is likely to come up with a more comprehensive and rational way to regulate cryptocurrencies, but James Ledbetter doesn't think they will particularly favor Bitcoin.

⑤Bitcoin prices will continue to fluctuate

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 .

As an investment, this is hard to recommend to anyone looking to avoid huge losses. Some say Bitcoin could go as high as $50,000 in 2021, and while that seems extreme, it’s not out of the question if investors move money from other assets into Bitcoin.

Of course, it’s also possible that the price of Bitcoin could go in the opposite direction in 2021. One thing that seems certain is that the wild ride that Bitcoin experienced in 2020 will be repeated — so buckle up .

(Bitcoin price daily chart)