Written by Vishesh Raisingani of The Motley Fool Canada
Bitcoin is up sharply this week as regulators in the United States move one step closer to approving a BTC futures contract. Some early investors are now wondering if a digital asset can overcome the psychologically important $ 100,000 barrier.
It is almost impossible to predict the future price of this volatile asset, but I believe that in the near future it will be possible to reach $ 100,000. That’s why.
Savvy commodity investors have used a stock-to-flow financial model to forecast future precious metal prices. The model measures the current stock of a physical commodity versus the annual increase in mining supply to arrive at an approximate forecast.
This model has been useful for traders betting on gold or palladium futures. Now some are applying this model to bitcoins as well. According to the model, the price of each BTC should have surpassed $ 100,000 a few weeks ago. This has convinced some investors that a six-figure rise in BTC is inevitable.
Millions of retail investors have switched to crypto for the first time in the past year. Bitcoin topped the list without a doubt.
However, larger players were also involved. Several hedge funds have added BTC to their portfolio, and big tech companies have added it to their balance sheets. El Salvador has even made it legal tender, allowing other countries to do the same.
Russian President Vladimir Putin said this week that cryptocurrencies have some “value” and that Russia is interested in alternatives to the US dollar in global oil trading. This is another sign that the demand for BTC is huge and the supply is capped at 21 million. This wave of new demand could also push the price of Bitcoin beyond $ 100,000.
Most investors now consider Bitcoin to be the digital version of gold. It remains to be seen if bitcoin will become a safe haven during economic shocks or inflation. But if the digital asset does destroy gold, it could be worth up to $ 10 trillion. This implies an estimate of approximately $ 475,000 for each unit of BTC.
Even if BTC will never completely replace gold, $ 100,000 seems quite achievable.
How to invest in bitcoin
The best way to buy bitcoin in Canada is with an exchange-traded fund, for example Bitcoin ETF Purpose (TSX: BTCC.B). Purpose buys and holds a fixed amount of BTC per unit, which means it is tracking the market performance of this digital asset. At the moment, each BTCC unit represents 0.00016606 bitcoins.
Management fees are capped at 1% and the fund’s assets are over $ 1.6 billion.
The reason this is the best way to buy Bitcoin is because it is eligible for registered tax accounts. In other words, you can keep BTCC in your Tax Free Savings Account (TFSA) or registered retirement savings account. Should Bitcoin ever surpass the $ 100,000 milestone, holding this ETF with the TFSA will help you lower your capital gains taxes.
The message “Is $ 100K Bitcoin Inevitable?” first appeared on Canada “Motley Fool”.
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The stupid investor Vishesh Raisingani does not have any position in any of the aforementioned shares. Motley Fool has no position in any of the mentioned stocks.