In 2020 Bitcoin and the rest of the cryptocurrencies start on a positive note. Although market action in the latter semi-anniversary of 2019 disappointed crypto bulls as Bitcoin continues to fall, digital assets matured as an asset class and growing institutional acceptance culminated in the launch of innovative new trading instruments. In addition to this BTC, the best investment of the decade has been listed, with the highest volume and hash rate of transactions.
After falling to $6,850 earlier this year, BTC seems to have built a temporary base with gains of more than 33 percent by having $9,200 earlier. While prices have marginally decreased, the rise is still intact as the short-term bullish channel suggests. There is a significant resistance ahead of us around the $9500 mark— a break from this point will represent a greater medium-term correction.
The current trend is positive given the price split over the medium-term bearish pattern. Although MT prejudice has turned to bearish and ST prejudice neutral, any subsequent gains will depend on BTC overcoming the resistance. As normal, there is a great deal of speculation about what drives BTC prices up. Let’s look at some of the big rivals.
1. BTC Futures
CME is a pioneer in controlled space for crypto derivatives. A week after a similar project was initiated by CBOE, the Bitcoin Futures were launched in December 2017. But while the latter dropped within 15 months, CME continued to remain solid, with record highs for BTC futures trading reported in August last year.
Recently in December, Bakkt revealed its controlled BTC options, which released its future platform in September. Once again, the CME lagged on January 13 of this year with its optional contract trading instrument. Notwithstanding a later start, CME started a boom with an open day volume of more than 2.3 million dollars, more than 5 times the volume of its rival Bakkt.
For the first four trading days of 2020, the future interest rate was up 70% with the corresponding Bitcoin price in anticipation of the launch of BTC options. On the day of the launch, the BTC price touched $8800 before fixing a bit and making another high later. The reason for this euphoria is that the asset behind the CME options car is not Bitcoin itself but Bitcoin futures.
2. Geopolitical Uncertainty
The increase in BTC could also be related to the geopolitical hostilities which broke out earlier this year in the Middle East. As some analysts believe, the risk shift in traditional financial markets triggers buying Bitcoin which, compared to equities & fiat currencies, is considered a haven in times of trouble.
The BTC price action itself in Iran, which was directly involved in the case, shows some legitimacy. On the day following the attack, the P2P trading platform LocalBitcoins announced the price of 1 bitcoin for approximately 1 billion Iranian rials or over $24,000—a payout of nearly 200 percent.
But in other countries such as Venezuela, where the national currencies are low at dual exchange rates, this is the actual market rate, one by the central bank of the country.
3. Bitcoin Halving
Ultimately, the forthcoming Bitcoin halving case in May 2020 that would halve the BTC mining reward— from the present 12.5 BTC per block to 6.25 a block. The rationale behind halving is to prolong the network lifetime and maintain the BTC value intact by regulating the coins ‘ availability.
Although we had only two previous cases of Bitcoin halving, a year before & after the split of rewards they reported massive gains. Will it happen again, when we expect the third halving in May 2020… time will tell, but the recent price adjustments and history are likely to agree.
Bitcoin will soar again
After a rejuvenating 2019, it seems that Bitcoin is growing again. While its underlying environment–billions of dollars shuttles between black market traders–is essentially volatile, there is a fundamental change on the horizon. Sometime in May, the Bitcoin network gradually lowers their “block incentive,” the amount paid to the network’s stable miners.
Although miners are currently receiving 12.5 bitcoins for each new block of transactions (market value: $87,000), the network must change to offer a lower payout, a reward of only 6,25 bitcoins. This reduction, which happens on 210,000 blocks, was called “halfway,” or sometimes “halving.” Last time, the crypto market was not very popular— in July 2016 when the reward fell from 25 bitcoins to 12.5 bitcoins. At that time Bitcoin traded in the middle of 600 dollars. Today, however, with more exposure to its issuance and final supply contract rates, bitcoin’s prices could rocket the charts. Many claims that half is “sold” (that is, that everyone knows it’ll happen), while others believe that the declining reward will make it more pressing to purchase Bitcoin.