CEO of US Global Advisors: 2021 will be an important year for Bitcoin and Ethereum

Frank Holmes, CEO of US Global Advisors, said that 2021 will be an important year not only for gold but also for cryptocurrencies.

In an interview with Kitco News on Monday, Holmes said he expects digital assets such as Bitcoin (BTC) and Ethereum (ETH) to perform as well as gold. He believes that these digital assets are gaining adoption due to their underlying value drivers.

Regarding Bitcoin, Holmes believes that as a multi-year trend continues, more and more people are beginning to embrace this digital asset:

“Over the past three years, the number of wallets has continued to grow, and the number of people embracing Bitcoin has continued to grow. The growth has been pretty steady.”

While many in the cryptocurrency industry compare Bitcoin to gold, Holmes said Bitcoin is not driven by macro drivers like gold. Instead, the catalyst for Bitcoin is the deflationary halving event in May of this year.

He explained:

“If all the gold mines in the world said tomorrow we’re going to cut production by 50%, I can guarantee you the price of gold would be $10,000.”

“It’s a function of supply and demand,” Holmes concluded. After the May halving, the number of newly mined bitcoins entering the market fell to about 900 per day, and that supply has been quickly absorbed by institutions and large companies.

Meanwhile, Ethereum continues to benefit from the growth of decentralized finance (DeFi). In terms of total value locked, the DeFi ecosystem is worth more than $14.6 billion. Ethereum is the basis for much of this activity. According to CoinMarketCap, the market capitalization of DeFi tokens is currently $18.2 billion.

As for gold, Holmes expects a “two standard deviation” move in prices, which could add $400 to $800 to the metal over the next 12 months.

“That would take gold to $2,200, $2,600,” he said.

Gold futures on the Comex division of the New York Mercantile Exchange opened up $26.40 at $1,866.40 an ounce on Monday.