An equity and derivatives strategist with a global financial services firm specializing in institutional trading believes that bitcoin has a place in investment portfolios. He has a price target for bitcoin of $50,000 in 2021.
Bitcoin Has a Place in Investors’ Portfolios
BTIG is a global financial services firm specializing in institutional trading, investment banking, research, and brokerage services. The firm has over 3,000 institutional and corporate clients worldwide, according to its website. Its chief equity and derivatives strategist, Julian Emanuel, talked about bitcoin in an interview with CNBC’s Fast Money earlier this week.
He was asked if bitcoin has a place in investors’ portfolios instead of cash. The chief equity strategist replied: “It is not necessarily instead of cash. It is instead of the 40% that would be the traditional 60/40 bond allocation.”
He explained that “if the Fed is not going to permit negative rates and they’ve been vocal about it, and we’re starting to see signs of inflation, it’s reasonable to expect that you could have losses in bond portfolios in the foreseeable future.” The strategist continued: “when you combine that with the fact that you’ve got this entire cohort of young investors, the same ones that were really aggressively pushing technology stocks this summer who have 40-year investing horizons an alternative to bonds is very, very sensible.” Emanuel added:
From our point of view, while the Fed continues to add to its balance sheet and the U.S. debt continues to go higher, bitcoin is a viable alternative.
He was then asked if companies should consider holding bitcoin instead of cash equivalents on their balance sheets.
“It’s certainly, again, an alternative and we’ve seen several of them come to that conclusion and one of the facts of life is that you really haven’t been rewarded, and perhaps rightly so, in this zero interest rate environment for cash,” he replied. While emphasizing, “I don’t know that I want to go quite that far because again that’s an individual corporate management perspective,” he said:
In a diversified investment portfolio, we do think there is a place for crypto.
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Bitcoin’s Price Target of $50,000 in 2021
Emanuel has a price target for bitcoin of $50,000 by the end of 2021 which he feels is a reasonable price forecast.
To arrive at this price prediction, he compared the price of bitcoin to the Nasdaq 100 (NDX), which peaked in the dot-com bubble and then took years to reach that peak again.
“It took NDX 14 years to rise above its parabolic ‘blowoff top,’ then 6 years to rise a further 150%,” he wrote, adding:
Bitcoin appears poised to exceed its 2017 parabolic ‘blowoff top’ in a mere 3 years. Should bitcoin’s speed of ascent keep pace with the past three years and the degree of the rally approximate that of NDX, $50,000 per bitcoin is a reasonable year end 2021 price target.
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