Bitcoin prices will rally sharply this year, moving toward the $20,000 level, according to a recent Bloomberg analysis.
The analysis, which focused on the digital currency’s market history and appeared in the latest edition of The Bloomberg Crypto Outlook, stated that:
“Bitcoin is mirroring the 2016 return to its previous peak. That was the last time supply was halved, and the third year after a significant peak.”
“After 2014’s 60% decline, by the end of 2016 the crypto about matched the 2013 peak,” the report noted.
“Fast forward four years and the second year after the almost 75% decline in 2018, Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend,” the document predicted.
[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 stating that while bitcoin may very well reach $20,000 before 2020 is through, it will be for different reasons than the ones outlined in the Bloomberg analysis.
Some of them emphasized the so-called halving, during which the mining incentive was lowered by 50%, sharply reducing the rate at which new supply enters the market.
Others spoke to expectations of future demand as potentially pushing the digital currency’s price higher.
Analyst: ‘Structural’ Factors Will Fuel Gains
Bitcoin will see “new highs” this year, said Alex Mashinsky, CEO of Celsius Network.
“I’ve been talking about this 20k number since January,” he stated, pointing to two major “structural” factors as driving the cryptocurrency’s gains.
The halving is placing “tremendous deflationary pressure on bitcoin, and at the same time, we see a dramatic increase in the number of new people signing up and buying bitcoin.”
“Increased demand, decreased supply beats out all the noise in the system and that will help us see these new highs in 2020,” Mashinsky concluded.
Eric Ervin, CEO of Blockforce Capital, also commented on the situation, stating that bitcoin could “absolutely” hit $20,000 by the end of the year.
He specifically pointed to “the significant amount of fiscal and monetary stimulus and the possibility of rampant inflation on the horizon.”
“If you couple that with the relatively small market cap of bitcoin it becomes easy to see that we are at a tipping point,” said Ervin.
“The new supply coming on to the market was just cut in half, and global governments and central banks are printing money faster than any other point since the great financial crisis,” he stated.
“The fundamentals are lining up for a potentially explosive rally in the price of bitcoin.”
“I think Bitcoin can approach the $20k level in 2020/2021, but not necessarily because of prior year’s trends,” said Michael Conn, cofounder and CEO of Singapore-based fund Zilliqa Capital.
“It is easy to say that it will reach $20k IF it follows 2016’s trends,” he stated.
“I feel it will have a chance of approaching the $20k level because of fundamental growth in usage of the peripheral ecosystem.”
Conn elaborated on this, stating that:
“I believe the balance of 2020 and into 2021 will help prove out the core construct of the decentralized financial landscape,” more specifically “the foundation of a decentralized financial network that can serve as a hub for payments, remittances, lending, insurance and investments globally.”
Further, he predicted that “the visible benefits of the blockchain to serve the unbanked and underbanked will lead to growth in the demand for and value of Bitcoin and its relevant counterparts.”
John Todaro, director of digital currency research for TradeBlock, also spoke to rising interest in bitcoin, but instead of focusing on user adoption, he weighed in on the shifting preferences of institutions.
“As institutional investors grow in the space, and increase their appetite for bitcoin, demand will easily outstrip supply, resulting in upward pressure on” the digital currency’s price, he stated.
“If we can get the economy back to work we could see an even greater increase in invested capital towards risk markets, which would also flow into bitcoin and cryptocurrencies,” said Todaro.
He also weighed in on the methodology used in the Bloomberg analysis.
“Now, will bitcoin follow the same trend that occurred in 2016 resulting in new all time highs this year?”
It’s “certainly possible, but as of now there still remains considerable overhangs across financial markets as well as ongoing regulatory challenges to the space which could limit that trajectory from playing out as before.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.