Why will the Bitcoin rally carry into 2021?

Bitcoin is one of many digital currencies. Unlike traditional "fiat" currencies created and operated by a government and central bank, Bitcoin is "mined," or created by people who solve mathematical problems with computing power. Transactions are kept on the blockchain, an encrypted and decentralized ledger that protects the integrity of Bitcoin while also ensuring the privacy of the user.

2021: Another Massive Year for Bitcoin Prices?

Bitcoin is attracting a growing number of analysts, and as a result, Bitcoin price targets are becoming more commonplace.

Some have been downright bombastic. Former Adaptive Capital partner Willy Woo calls $200,000 a "conservative" estimate for year-end 2021. In mid-November, Citigroup told its institutional clients that it sees the potential for Bitcoin prices to rise as high as $318,000 by the end of this year.

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Others are more restrained. For instance, BTIG's Julian Emanuel says Bitcoin could reach $50,000 – the same price target Bloomberg pointed to in its Crypto Outlook 2021.

Ross, without making a specific prediction, sees the cryptocurrency space further growing in value to the global financial system:

"I think in 2021 we'll see a lot of news that will move the price higher," he says. "We'll get closer to an ETF, announcements from broker-dealers that they're getting involved. Some more FOMO (fear of missing out) from retail investors, and what you'll also see is that at some point you'll see a massive RIA announce that they have a meaningful amount of their business in BTC."

"One of the things we do believe is that there's a secular trend into Bitcoin," adds King, who's also reticent to throw out a price target. "We're in an S-curve type of growth with an emerging technology. If you look at the previous patterns of prices versus adoption, it tends to consolidate and then have a multiple move higher. This is starting to look pretty decisively higher."

This combination of increased investment interest in Bitcoin as an investment, as well as increased adaptation of Bitcoin, cryptocurrency and blockchain technologies by companies, points to a perfect storm for prices.

But Ross adds a word of caution.

"You always have risk," he says. "Systemic risk, market risk … There are some global macro events that can affect markets, and as Bitcoin becomes more financialized, it won't become that noncorrelated asset anymore."