Bitcoin (BTC +0.22%) has held above the $80,000 mark for two weeks, and many Wall Street analysts think the bottom may finally be in. Indeed, Jurrien Timmer, Director of Global Macro at Fidelity, sees Bitcoin reaching $300,000 in 2029, an eye-watering 257% upside on today’s price of around $84,500. He thinks a new bull cycle is underway based on past performance and the growing appeal of alternative assets.
Today’s Change
(0.22%) $190.16
Current Price
$84,793.00
Key Data Points
Market Cap
Day’s Range
$84518.00 – $85014.00
52wk Range
$57945.16 – $126079.89
Volume
14.7B
Why Fidelity thinks Bitcoin can soar
Timmer has long called himself a “secular bull” on Bitcoin, meaning he is optimistic about the lead cryptocurrency’s long-term growth potential. A large part of that is because he sees Bitcoin, along with gold, silver, and real estate, as forms of hard money that could hedge against currency debasement and fiscal uncertainty.
Image source: Getty Images.
Crypto winters usually last a year, Timmer points out, and the current slump began after Bitcoin’s peak last October. If this plays out again, the recent upward swing could be the start of a major rebound. He also identified a pattern in the 52-week Bitcoin-gold Z-score, which measures how under- or overvalued Bitcoin is relative to gold. It recently turned positive after falling to -100% in the summer, something that’s happened three times since 2014, with each time preceding a new growth cycle.
Change is certainly in the air. During the price slump, it seemed no amount of good news could boost prices, while bad news sent them spiraling further. That’s not what we’ve seen recently — Bitcoin has just held strong against significant headwinds, such as Washington’s stalled Clarity Act and the Federal Reserve’s rate hike.
Can Bitcoin reach $300,000?
Bitcoin’s road to $300,000 rests heavily on its store-of-value narrative. Some investors are rethinking the classic 60/40 portfolio (with 60% stocks and 40% bonds) because the old wisdom that bonds usually rise when equities fall isn’t as applicable as it once was. That makes alternative assets increasingly important as a diversification tool. Moreover, high costs of capital, geopolitical uncertainty, and concerns about growing government debt mean investors are seeking hedges against dollar debasement.
Gold is a frontrunner, with thousands of years of history and an established reputation as a store of value. Bitcoin may be dubbed “digital gold” because of its capped supply and decentralized nature, but it has not yet proven itself — at less than 20 years old, it’s still too volatile and speculative. That’s OK — it doesn’t have to be digital gold to function as a portfolio diversifier.
I put Bitcoin in the same asset category as gold, but view it as a distinct investment with its own strengths and weaknesses. For example, volatility goes both ways, giving Bitcoin both greater risk and greater growth potential. It is a network, which makes it much easier to store and move Bitcoin across borders. It can complement rather than replace gold, and in that light, there is room for both to grow.
Let’s say more investors allocate 10% or 20% to alternative assets, with 1% or 2% going to Bitcoin. The percentage they give to Bitcoin depends on their risk tolerance, but the growth of spot Bitcoin ETFs makes it easier than ever to get a small amount of exposure. With a market cap of $1.7 trillion, Bitcoin currently accounts for about 0.3% of global wealth. If that percentage were to triple or more, $300,000 would seem like a pretty feasible price target.