Bitcoin could rise to $400,000, or almost 900%, this year, said Harry Ye, founder of Quantum Fintech Group. In his opinion, the cryptocurrency market may grow due to the massive use of stablecoins – digital coins, the rate of which is pegged to some kind of tangible assets.

Investors will use bitcoin to hedge against inflation as the Fed (US Federal Reserve System), according to Yeh, will continue to issue money.

The cryptocurrency market as a whole is now on the eve of a growth supercycle, and it has great prospects, the expert believes. In his opinion, the beginning of the mass use of stablecoins can lead to an increase in the price of digital assets.

The current situation is very similar to the bull market in 2017. We are definitely in the middle of a bull market. But it becomes more unique than the last cycle of growth, since then the use of stablecoins, which are plentiful in the current bull market, was not widespread,

said Harry Yeh.

What are stablecoins

Stablecoins are digital coins whose exchange rate is pegged to some tangible asset. For example, to ordinary (fiat) currencies, precious metals, securities, oil, etc. This helps stabilize the value of digital currencies as their market is subject to major fluctuations.

The first stablecoin in history was the USDT digital currency from Tether, which was released to the market in 2015. It is pegged to the US dollar at a ratio of 1:1.

Over time, stablecoins can become an alternative to the usual fiat money in countries where the exchange rate of the national currency is unstable, said Artem Deev, head of the analytical department at AMarkets. In his opinion, the popularity of digital assets that are tied to some kind of material resources will grow.

Can the price of bitcoin reach $400,000?

The forecast for the $400,000 bitcoin rate looks “overly optimistic” given the current risks. According to analysts, such a strong growth can occur if the world’s largest economies decide to abandon fiat money and rely on the use of cryptocurrencies. Such a scenario looks unrealistic so far: central banks continue to be skeptical about such assets. Nevertheless, crypto assets are becoming more and more practical and may remain in demand for a long time.

At the same time, the use of stablecoins is unlikely to cause such a strong growth in bitcoin, said Chen Limin, CFO and head of trading operations at ICB Fund. According to him, now they are already widespread enough, investors have been actively using them in recent years.

According to Vladimir Smerkis, Director of Binance in Russia, in the long term, Bitcoin will increase in price, although there will still be strong volatility (especially in the first quarter of 2022). He attributes this to the actions of institutional investors and their interest in the cryptocurrency market. In addition, bitcoin will continue to be one of the tools to avoid inflation.

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