Citibank Director: Bitcoin is similar to gold in 1970 and aims to reach $310,000 in 2021

Tom Fitzpatrick , managing director of Citigroup and foreign exchange expert , released a new report titled "Bitcoin: Digital Gold of the 21st Century". He pointed out that there is a clear analogy between the gold market in 1970 and Bitcoin.

The history of money and gold

The seeds of the 1970 gold bull market were sown in 1944. After World War II, 44 countries signed the Bretton Woods Agreement, which influenced global currency markets until 1973.

The agreement pegged the dollar to gold and all other currencies to the dollar. It sought to create a system where the dollar was equivalent to gold as a reserve currency. And, the United States has been quite successful in achieving this vision.

However, as the world industrialized and the dollar inflated, the demand for gold and other currencies began to grow. By 1970, people were rushing to exchange their banknotes for precious metals, which led to the gold rush. So, in 1971, US President Richard Nixon broke the link between the dollar and gold, giving birth to the fiat currency system we know now.

In the context of relatively free monetary markets, gold prices rose sharply over the next 50 years.

Monetary inflation and the depreciation of the dollar are the basis for Fitzpatrick’s comparison of Bitcoin to gold. The report states:

“The bitcoin move happened after the great financial crisis (in 2008), when we had a new monetary regime as we cut interest rates to zero.”

Fitzpatrick pointed to Bitcoin’s first bull cycle from 2011 to 2013, when it increased 555-fold.

Currently, the COVID-19 crisis and the associated monetary and fiscal responses by governments are creating a market environment similar to that of gold in the 1970s. Governments have made it clear that they will not shy away from unprecedented money printing unless GDP and employment pick up.

The above analysis is bullish for any Bitcoin enthusiast. Something that often gets a lot of attention in crypto forums is finally going mainstream.

Crazy Bitcoin Target

Fitzpatrick didn’t stop there. His price prediction chart shows that Bitcoin price will reach $318,000 by December 2021.

The four-year bull and bear cycle after 2011 and the ascending parallel channel since 2013 project a 102-fold increase from the 2018 low of $3,200 by December 2021.

“Over the past seven years, I think the price action has been more symmetrical, forming a very well-defined channel, which puts us on a similar time frame to the last rally (2017).”

Fitzpatrick also stated in another report that the price of gold is between $4,000 and $8,000 per ounce due to the looming economic crisis.

Therefore, it seems highly likely that BTC’s price targets are overstated for traditional investors. Nevertheless, the principle theory of a paradigm shift in global currency markets is not new. Economist Ray Dalio has hinted at a devaluation of the dollar as well as a paradigm shift in currencies.

Bitcoin could be the missing link in this new paradigm.

Furthermore, such targeting exposure to institutional clients of the largest US bank (Citigroup) is itself positive for market sentiment.