Optimism around Bitcoin was far stronger at the start of the year, but it may not be long before the cryptocurrency regains that same level of hype, according to Galaxy Digital’s head of research, Alex Thorn.
“Attention will come back to Bitcoin, it always does,” Thorn said during an interview with CNBC on Friday, emphasizing that “Bitcoin was the hottest trade of the year at the start of the year” after Donald Trump’s win in the US presidential election.
“For everyone worldwide and all sorts of asset classes…That’s just not true for the rest of the year.”
Investor Attention Diverted to Other Sectors
Thorn explained that investors have recently focused their attention on areas such as artificial intelligence (AI), nuclear energy, quantum technology, and gold. He noted, “There were a lot of other places to get gains this year that impeded the allocation to Bitcoin.”
He added, “We’re entering a much more mature era, where distribution from old hands to new is incredibly healthy for distributing the ownership of Bitcoin.”
While Thorn maintains a long-term bullish outlook on Bitcoin (BTC), he has revised Galaxy Digital’s year-end price target downwards to $120,000 from $185,000. A price of $120,000 would represent an approximate 17% increase from Bitcoin’s current trading price of $102,080.
Many of the sectors Thorn identified as drawing investor attention away from Bitcoin, particularly gold, are assets that Bitcoin is frequently compared to.
JPMorgan analysts recently commented that the increased volatility in gold during its rally to record highs in October makes the precious metal a riskier investment, thereby making Bitcoin “more attractive to investors.” This assessment is based on the Bitcoin-to-gold volatility ratio falling to 1.8, indicating that BTC carries 1.8 times the risk of gold.
Quantum Computing Remains a Divisive Topic in the Bitcoin Industry
Regarding AI, reports from October 10 indicated that Bitcoin and Nvidia stock (NVDA) have been moving in closer correlation than at any point in the past year. This trend has raised concerns among some market observers about a potential crash akin to the dot-com bubble era of the late 1990s.
Meanwhile, the ongoing discussion surrounding the potential threat posed by quantum computing to Bitcoin continues to divide experts. Amit Mehra of Borderless Capital recently stated that quantum computing is still years away from posing a threat to Bitcoin.
Conversely, Charles Edwards, founder of the quantitative Bitcoin and digital asset fund Capriole, believes the situation is more urgent. He argues that the industry must implement solutions as soon as possible to mitigate potential risks.