The year has been relatively quiet in terms of price movement for Bitcoin. The cryptocurrency started the new year trading sideways at low $7000 ($7,187) according to Coinmarketcap. By January 3, the price dipped below the $7000 support for the first time trading at $6,921 before jumping back up above the support.
There seem to be a consensus among many analysts that the $6000 mark is a critical support under which if the price of the coin falls, the likelihood of going all the way down to $3000 becomes high. Nevertheless, the price movement in the meantime has shown an upward trend with Bitcoin presently trading at $7,639 according to data from Coinmarketcap. This followed more than 48 hours of upswing.
There have been wild predictions that the price of Bitcoin could soar based on known cycles with some analysts predicting that we would see the digital currency test the ATH value by the end of 2020.
Even though there is no one that is certain about the price movement of one of the most unpredictable assets, The Cryptomist believes that prices would rise up to $7,800- $8000 before we see any downward correction.
$Btc— The Cryptomist (@TheCryptomist) January 6, 2020
Possible rise towards 7.8k- 8k before a drop
Do not think we break the 3Day falling wedge at this next attempt
May very well see a strong rejection according to the rising wedge RSI
Would not get carried away with the bullish sentiment here loveys pic.twitter.com/ERLH6MsnUU
Effect of the Upcoming Halving
You can sense the excitement among crypto enthusiasts regarding the upcoming Bitcoin halving. This is to be expected because the event is always preceded rallies in the past, then more rally after it that sees the price of Bitcoin skyrocket. Obviously, the expectation is that the next halving expected on June 10, 2020 would not be different.
Bitcoin halving essentially is the built-in feature of the cryptocurrency that makes the reward gained by miners to reduce by half. Originally, Bitcoin mining reward was 50 BTC every 10 minutes. This was the time that the value of Bitcoin was in pennies and no one knew that it would become such a valuable asset. By 2012, the block reward halved to 25 BTC every 10 minutes. What has been a constant in the block reward halving is that it always preceded a high volatility that has seen price surge.
For instance, after the first halving, Bitcoin surged to $1100 from $11 in 18 months. This pattern was repeated in 2016 when the coin surged from $230 in that year and culminated in the all-time-high (ATH) of $20,000 the following year.
The increase in the value of Bitcoin after every halving is traceable to scarcity since many miners may be unwilling to sell the generated coins as their hoard reduces. What is obvious is that scarcity makes commodities more valuable. This may be a strong factor in the 2020 Bitcoin price.
Other Factors To Consider
Nevertheless, we should understand that there are other factors that may determine the trend of BItcoin price in 2020. One is that there is more awareness about Bitcoin in 2020 that in 2016 during the last halving. This time, institutional investors who have been on the sidelines may take advantage of the prospect, thereby pushing up the price of the digital currency due to increased demand.
However, bear in mind that unlike 2017 when ICOs were popular, failure of most ICO-funded blockchain projects has been a put-off for many investors. Striking a balance may not be a simple matter, but if history is anything to go by, Q4 of 2020 would see the bulls having upper hand in the coin market.