Optimism around Bitcoin was much stronger at the start of the year, but it may not be long before the cryptocurrency regains the same level of hype, according to Galaxy Digital's head of research, Alex Thorne.
“Attention will return to Bitcoin, as it always does,” Thorne said during an interview with CNBC on Friday, stressing that “Bitcoin was the hottest trade of the year at the beginning of the year” after Donald Trump won the US presidential election.
“For everyone around the world and all types of assets…that's not true for the rest of the year.”
Investors' attention has been diverted to other areas
Thorne said investors have turned their attention towards areas such as artificial intelligence, nuclear energy, quantum technology and gold. “There were a lot of other places to get gains this year that hindered Bitcoin allocation,” he said.
“We are entering a more mature era, where distribution from old hands to new hands is an incredibly healthy thing to distribute ownership of Bitcoin,” Thorne added.
While Thorn remains long-term bullish on Bitcoin (BTC), he lowered Galaxy Digital's year-end price target to $120,000 from $185,000. The move to $120,000 represents an increase of approximately 17% from Bitcoin's current price of $102,080, according to CoinMarketCap.
Many of the sectors that Thorne said are drawing investor attention away from Bitcoin, especially gold, are the same ones it is often compared to.
JP Morgan analysts recently said that gold's higher volatility during its rise to all-time highs in October makes the precious metal riskier and Bitcoin “more attractive to investors,” based on the Bitcoin-to-gold volatility ratio falling to 1.8, meaning Bitcoin carries 1.8 times the risk of gold.
Quantum computing continues to divide the Bitcoin industry
As for AI, it was announced on October 10 that Bitcoin and Nvidia (NVDA) stocks are now moving more in sync than at any time in the past year. This has some market watchers concerned about an impending collapse similar to the dot-com bubble era of the late 1990s.
Related to: Arthur Hayes says Zcash has become his family office's second-largest holding after Bitcoin
Meanwhile, the debate over quantum computing's potential threat to Bitcoin continues to divide experts. Amit Mehra of Borderless Capital recently said that quantum computing is still years away from threatening Bitcoin.
Meanwhile, Charles Edwards, founder of Bitcoin Quantitative Fund and digital asset fund Capriol, said the situation is far more urgent, and argues that the industry must implement solutions as soon as possible before it is too late.
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