Bitcoin ended 2019 on a good note, there were a lot of gains in the crypto giant. Opening the year at $3691 and closing at $7165, nearly a 200% gain in just a year. However, it gets more impressive depending on how you look at it. The high of the year was $13,868. So Bitcoin enthusiast may look at the potential nearly hitting the $15K mark or those opposed could say the market is weak dropping from those highs. So where does that leave the Bitcoin 2020 prediction? A crash or an all-time high? Many analysts see the cryptocurrency in the $20,000 area by the end of the year, and 2020 is off to a good start. rallying nearly 22% this year alone. We’re 3 weeks into January by the way. The three main talking points we have to address for Bitcoin in 2020 is Halving, Central Banks and Institutions and its transition to digital gold. Naturally, we have to look at some technical analysis to get a good picture of what’s to come.
Bitcoin 2020 predictions: Halving
Halving is an occurrence in the crypto market that happens every four years, as a leap year. It’s scheduled for May 2020 and it’s one of the main arguments for the upside in Bitcoin. This is what many crypto analysts believe will bring the price of Bitcoin up to the $20,000 level and beyond. Halving is the process where the amount of Bitcoin generates in 10-minutes is chopped in half. For example, if miners manage to generate 12.5 Bitcoin every 10-minutes throughout the halving process that number cut down to 6.25 Bitcoin per 10-minute intervals. This creates drought in supply, causing prices to go up. Based on the simple supply & demand principles. Over the past two halvings, Bitcoin managed to make significant gains. There is some skepticism around the halving process that is coming May 2020 because a lot of speculators and analysts believe it’s baked into the market already. Only time will tell.
In July 2016, Bitcoin halved, which did not create a crazy pop immediately but it was the beginning of a strong bull rally. In 5-months time Bitcoin rallied 75%. As seen below, the halving start was at the pink vertical line. Once the strong bull volume came in, price began to shoot up past the $1000 mark for the first time and didn’t turn back. There is said to be 32 Bitcoin halving events that will occur, after that, they will stop. Which gives us a lot of halvings to come.
Why do skeptics doubt halving gains in Bitcoin?
Many of the doubters have said that the halving that is to come May 2020 is already priced in. It’s what saved Bitcoin from a crash this past year, pulling price up from the mid $3000’s to $13,000 and slightly over. The argument is market efficiency which makes sense because the second the news came out the smart money would have taken a position accordingly to take advantage of the discrepancy of the supply outweighing the demand.
Bitcoin 2020 predictions: Central Banks & Institutions
Central banks and financial institutions have been dipping their toes in the world of cryptocurrency. In 2020, shortly after the launch of Facebook’s Libra a band of central banks have combined to dissect the potential use of cryptocurrency and digital currency. The central banks that have teamed up are the banks of Japan, the UK, the ECB, Sweden and Switzerland. Together with the Bank of International Settlements (BIS), they’re into the potential use of crypto. Some banks are a little skeptical about the infiltration of crypto in the global financial system. Jerome Powell, the head of the Federal Reserve warned Europe of Facebook’s Libra impact on global financial stability. The main outlook of this progression to the digital currency from central banks across the world increases the potential demand for Bitcoin and other digital currency which can spike the price in the coming years.
Institutional investors and traders are flooding into the cryptocurrency market as well, especially in 2020 and the coming years. The main reason for this is the 2019 SEC approval of the first “40 Act-regulated Bitcoin Fund”. The regulation plays in favor of Bitcoin and the potential of further Bitcoin products hitting the market. Options came out in 2019, are ETF’s next? There has been a Grayscale announcement that $600 million will inflow from new money investors, mainly hedge funds. Which increases demand and client exposure to the cryptocurrency.
Bitcoin 2020 predictions: Gold markets?
Bitcoin has had a lot of ups and downs as traders and investors are trying to figure out what correlation the cryptocurrency has to other markets. Bitcoin has been pegged as digital gold jokingly for some time, but now it’s becoming a reality. At the turn of the new decade, 2020, Bitcoin has started to show signs of strong correlation to the gold market and the price movement. This occurred when tensions between the United States and Iran increased. Longer-term, the correlation is not there. The more Bitcoin becomes correlated with gold, the larger the probability is that Bitcoin becomes a safe haven asset. If anything should happen in terms of global financial turmoil, the more bitcoin will rally.
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