By Robert Beadles, President of Monarch
– Bitcoin ’s Price Rally
For Bitcoin investors and entrepreneurs, the first month of 2020 has brought a lot of optimism for the new decade. So what’s behind Bitcoin ’s price rally, and how long will it last? The primary reason we’re starting to see an extended Bitcoin rally is because of the approaching halving. If readers are not familiar with this terminology, the Bitcoin protocol cuts the block reward in half every 210,000 blocks, which comes about every four years. This process will occur until the last bitcoin is mined in 2140.
Halving event—set to occur in May 2020
In my previous article for Fintech Zoom, I predicted the halving event—set to occur in May 2020—would spike the price to the $11,000 range. Halving events can positively impact price based on simple economics: if fewer bitcoins are generated, it makes them increasingly scarce and more valuable. Yet, data shows price increases do not happen instantaneously, but incrementally. The last halving occurred on July 9, 2016, and BTC remained in the $580 to $700 range; however, by mid-January 2017, the price of BTC was more than $900. And 526 days after the halving, the price was up 2,976%.
Bitcoin’s market cap – Bitcoin ’s Price Rally
Of course, there are factors to consider for this year’s halving event and how they might affect the increase in price. First, Bitcoin’s market cap has increased exponentially since 2016. In July 2016, the market cap was around $10 billion, whereas today it’s over $170 billion. Second, the Bitcoin derivatives market is robust. For example, the Chicago Mercantile Exchange has seen a notional value of $92 billion in contracts traded in two years. Third, it is crucial to consider the idea that Bitcoin has woven itself into the fabric of the financial system – even if many economists would not like to admit it.
BTC is an asset that interests more than a third of U.S. investors
To elaborate on the latter point, Grayscale Bitcoin Trust is an S.E.C. reporting company now. This Bitcoin-focused Trust has released investor studies demonstrating that BTC is no longer a niche investment, but rather an asset that interests more than a third of U.S. investors. Additionally, Silvergate Bank, a bank that works solely with the underserved cryptocurrency market, added 48 cryptocurrency clients in Q4 2019.
All of these things are good for cryptocurrency and great for Bitcoin. It means adoption is steadily happening. We are witnessing something revolutionary — a real change in the financial system. This year, we are poised to see governments digitize their national currencies, which is unprecedented. And blockchain and cryptocurrency companies that were only looking to capitalize on the fad of Bitcoin are continually dying off, their stock going to zero. The legitimate companies with legitimate solutions are rising to the top.
We are entering a new era
When all is said and done, these positive developments might make this year’s halving not quite as dramatic, but more of a slow and steady burn. Still, I believe the days of $3,000 to $6,000 BTC are a thing of the past. We are entering a new era.
About Bitcoin Price Prediction:
- Bitcoin Price Prediction 2020: BTC will be around $70,000 by Alexey Ermakov
- Bitcoin Price Prediction 2020: BTC will strongly be influenced by one major event: the Bitcoin – halving, by Moritz…
- Bitcoin Price Prediction 2020: Its best days still lie ahead of it, by Jeff Barroga
- Bitcoin Price Prediction 2020 Ranging Between $8k and $10k by Pascal Thellmann
- My Bitcoin price prediction for 2020 is $20,000 – Eric Brown
- Bitcoin Price Prediction 2020 – Part 1
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Bitcoin Price Rally