Bitcoin prices will rally sharply this year, moving toward the $ 20,000 level, according to a recent analysis by Bloomberg.
The analysis, which focused on the history of the digital currency market and featured in the latest issue of The Bloomberg Crypto Outlook, noted:
“Bitcoin reflects the 2016 return to its previous peak. This was the last time supply had halved, and the third year after a significant peak. ”
“After a 60% decline in 2014, by the end of 2016 the crypto was about to top 2013,” the report noted.
“Fast forward four years and the second year after the nearly 75% decline in 2018, Bitcoin will be approaching its record high of around $ 20,000 this year, in our view, if it follows the 2016 trend,” he anticipated the document.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
After this forecast was made, several analysts weighed in, with many noting that while bitcoin may reach $ 20,000 before 2020, it will be for different reasons than those outlined in Bloomberg’s analysis.
Some emphasized the so-called halving, when the mining incentive was reduced by 50%, sharply reducing the rate at which new supply enters the market.
Others spoke to expectations of future demand as potentially pushing the price of digital currencies higher.
Analyst: ‘Structural’ Factors Will Earn Fuel
Bitcoin will see “new highlights” this year, says Alex Mashinsky, CEO of Celsius Network.
“I’ve been talking about this 20k number since January,” he said, pointing to two major “structural” factors such as driving the earnings of the cryptocurrency.
The halving puts “tremendous deflationary pressure on bitcoin, while at the same time we are seeing a dramatic increase in the number of new people registering and buying bitcoin.”
“Increasing demand, reduced supply is hitting all the noise in the system and that will help us see these new highs in 2020,” concluded Mashinsky.
Eric Ervin, CEO of Blockforce Capital, also commented on the situation, noting that bitcoin could hit $ 20,000 in total by the end of the year.
He specifically referred to “the significant amount of fiscal and financial stimulus and the possibility of rampant inflation on the horizon.”
“If you combine that with bitcoin’s relatively small market cap, it’s easy to see that we’re at a tipping point,” said Ervin.
“The new supply that has come to the market has only been cut in half, and global governments and central banks are printing money faster than any other point since the great financial crisis,” he said.
“The fundamentals are preparing for a potentially explosive rally in the price of bitcoin.”
“I think Bitcoin may be approaching the $ 20k level in 2020/2021, but not necessarily due to the previous year’s trends,” said Michael Conn, cofounder and CEO of Singapore-based Zilliqa Capital fund.
“It’s easy to say it will reach $ 20k IF it follows the 2016 trends,” he said.
“I feel it will have a chance of approaching the $ 20k level due to a fundamental growth in the use of the peripheral ecosystem.”
Conn expanded on this, stating:
“I believe that the balance of 2020 and into 2021 will help test the core shape of the devolved financial landscape,” more specifically “the foundation of a decentralized financial network that can serve as a focal point for payments, payments, lending, insurance and investments . globally. ”
Further, he predicted that “the visible benefits of the blockchain to serve the unbanked and unbanked will lead to growth in the value, and value, of Bitcoin and its related counterparts.”
John Todaro, director of digital currency research for TradeBlock, also spoke to a growing interest in bitcoin, but instead of focusing on consumer adoption, he pressed on organizations’ changing preferences.
“As institutional investors grow in space, and their appetite for bitcoin increases, demand will easily outstrip supply, leading to upward pressure on the price of digital currency,” he said.
“If we can get the economy back to work we could see an even greater increase in capital invested towards risk markets, which would also flow to bitcoin and cryptocurrencies,” said Todaro.
He also focused on the methodology used in Bloomberg’s analysis.
“Now, will bitcoin follow the same trend that happened in 2016 with always new highlights this year?”
It’s “certainly possible, but at the moment there is a great deal of continuity across financial markets as well as ongoing regulatory challenges to space that could restrict that trajectory from playing out as before.”
Disclosure: I own a small amount of bitcoin, bitcoin cash, litecoin, ether and EOS.