Bitcoin, after a long period of stability, has jumped higher sharply – jumping over the $ 10,000 per bitcoin level closely watched for the first time since June and plunging toward $ 12,000.
The bitcoin price has added about 20% over the past seven days, hitting highs of $ 11,420 on the Bitstamp exchange in Luxembourg, amid equity market jitters and a gold-price rally, considered a safe haven asset.
However, some market watchers have warned that recent bitcoin price gains may not last – with the options market signaling only a 7% probability that bitcoin will return to its highest ever of around $ 20,000 before the end of 2020 .
“Our view for the 2020 balance is still high volatility with a year-end of about $ 7,000 [per bitcoin] with a drive higher to new highs in 2021, “Gavin Smith, chief executive of Panxora’s bitcoin and crypto consortium, said by email following the publication of Finder’s latest cryptocurrency prediction report, adding that he expects” a short-term washout this year ahead of time rally grips. “
“Our view is that we still believe that the markets are being pulled apart by the inflation hedge story that drives bitcoin higher and at the same time the global economy is suffering a huge demand shock with the potential to drive bitcoin lower. “
In March, the price of bitcoin fell sharply, in line with global stocks and other commodities, as the coronavirus pandemic spread worldwide and countries went into lockdown to contain it.
The price of bitcoin bounced back quickly, boosted by a long-awaited supply squeeze and bullish signals including investment giant Paul Tudor Jones revealing it was buying bitcoin as a potential hedge against the unprecedented central bank stimulus measures inflation designed to propel economies that were hit by a coming coronavirus.
Smith’s warning coincides with comments made by Binance chief executive Changpeng Zhao (CZ) last week, who said bitcoin is still tied to the stock market and a future crash could send the bitcoin price lower .
“People should not take the description of bitcoin as a safe haven asset too literally,” CZ told Bloomberg.
Others have also warned that the price of bitcoin may be lower in the short term.
“Not so much money will go into bitcoin while people try to survive,” Jimmy Song, author of Bitcoin Programming, said in the Cryptocurrency 2020 Finder Predictions report.
“Until the prices rise at the grocery store, bitcoin won’t really start to pull itself. I suspect that will take another nine months.”
A Finder report, released last week before bitcoin’s surge toward $ 12,000, revealed that half of the 28 bitcoin and crypto experts surveyed believed this was the right time to buy bitcoin, with 32% recommending investors hold and 18% say it’s time to sell.
Another panelist, University of New South Wales associate professor of finance, Elvira Sojli, said she expects the price of bitcoin to be under $ 10,000 by December 31 2020. The panel’s consensus was that the bitcoin price had climbed to just under $ 13,000 by the end a year.
“If anything, the second or third wave of Covid-19 can drive [the bitcoin price] down, ”Sojli said, pointing to the devastating economic impact of the coronavirus.
Meanwhile, as bitcoin begins its rally past $ 11,000, the bitcoin options market was signaling only a 7% probability of the price returning to its highest ever of $ 20,000 per bitcoin, data from an analytics firm revealed Skew crypto derivatives, with the market giving the odds. of $ 10,000 per bitcoin by Christmas at around 50%.
“The options market recreates the likelihood of [new highs] by the end of the year, from 4% to 7% over the past week, “Skew chief executive Emmanuel Goh told bitcoin and crypto news site Coindesk.
Elsewhere, others are confident that the bitcoin price will continue to soar.
“There have been significant changes since March in the way institutional investors view bitcoin,” Joe DiPasquale, chief executive of BitBull Capital, said by email.
“Now that institutions have moved into bitcoin in 2020, the price has shown more support over the past few months. We won’t see a repeat of the March crash, but bitcoin will still remain slightly more volatile than equities . “
“I think the price needs to take a bit of a breather – it has moved quite a bit in a short space of time,” Bill Herrmann, managing partner of investment management firm Wilshire Phoenix, said by email, adding could see the bitcoin price hit its all-time highs by the end of the year “if we continue to receive regulatory clarity and ongoing institutional adoption,” highlighting last week’s decision by the U.S. Office of the Currency Manager , to allow banks in the country to hold digital assets as catalysts for the latest rally.
“It’s huge for space and that should serve as a tail for quite some time.”
Trying to predict bitcoin price movements has proven difficult, however, and some have warned against trying to predict market movements.
“Predicting the price of bitcoin on an exact timeline is a fool’s mistake,” Peter Wall, CEO of UK-listed crypto miner Argo Blockchain, said by email, though he adds that it is ” very optimistic in the medium to long term, as we believe bitcoin will once again be one of the best performing asset classes in the coming months and years. “