27.12.202115:18 Forex Analysis & Reviews: Bitcoin will not be able to rise to $1 million due to competition with gold, NFT and other financial instruments

Over the past month and a half, experts of different competencies and reputations have found themselves in an awkward position due to bold predictions regarding the cost of Bitcoin at the end of 2021. In December, the rhetoric of many crypto influencers has changed. For example, analyst PlanB believes that BTC will cost $100k only in 2023. Ray Dalio did not stand aside, who spoke critically about Bitcoin as an alternative means of settlement in the near future.

According to Dalio, the value of the first cryptocurrency is overestimated. In the near future, the coin will face increased competition from the developing sectors of the digital economy, and therefore you should not wait for Bitcoin at a price of $1 million per coin. He also added that the cryptocurrency will not be able to double the capitalization of gold due to the stable positions of the precious metal and the presence of traditionalist investors on the market. Dalio also confessed his love for NFT tokens and stated that they can compete significantly with Bitcoin.

There are grains of truth in Dalio's position because, in fact, gold and Bitcoin complement each other and are part of the diversification process. When the precious metals market falls, investors turn to Bitcoin, but when the fear and greed index goes into fear mode, players hedge risks in gold. Therefore, I believe that the competition between digital and classic gold will continue.

But it would be rash to think that BTC/USD quotes will stop growing in the future. Despite the reduction of the economic stimulus program, Bitcoin found its investors and continued to remain in demand. I immediately recall the record low BTC balance on cryptocurrency exchanges. The increased correlation with the S&P 500 index also indicates that market participants view cryptocurrency as a high-risk investment instrument, and not just a means of hedging risks. Therefore, I have no doubt that Bitcoin has a significant margin of safety, and its value forces institutions to look for additional resources to level the weakness of the ecosystem.

As for the technical picture, on the four-hour chart, Bitcoin made a confident rebound from the $49.5k support zone. This means that the price will soon test the strength of the resistance line at $52k. But I would not count on a confident breakdown of this peak, since high volatility and low purchase volumes still remain in the market. Moreover, the probability of falling into the range of $42k-$45k remains, as buyers do not show high activity.

The main argument in favor of this assumption is the end of the year, which is always accompanied by increased volatility and profit-taking. I am by no means a pessimist, but this week I expect an increase in pressure on the price, which will not be something critical, but will definitely neutralize the probability of reaching the level of the previous absolute maximum.