According to a recent Bloomberg analysis, we can expect bitcoin to return to the heady days of 2016 and hit the $20,000 mark again, writes financial analyst Charles Bovaird.
The Bloomberg Crypto Outlook said, “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.”
It also suggests, “Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend.”
Most predictions about the value of Bitcoin depend on tracking its behaviour in the past. For example the Bloomberg report also notes, “After 2014’s 60% decline, by the end of 2016 the crypto about matched the 2013 peak.”
Naturally, any prediction about the leading cryptocurrency elicits a response from many other analysts. Bovaird remarked, “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.”
There are those who emphasise the effect of the halving, which sharply reduced the rate at which new supply enters the market, while others pointed to “expectations of future demand as potentially pushing the digital currency’s price higher.”
There are a few who are firmly behind the Bloomberg prediction, such as Alex Mashinsky, CEO of Celsius Network. He told Bovaird, ““I’ve been talking about this 20k number since January,” saying that there are two key structural factors that should drive the price upwards.
Mashinsky is of the opinion that the halving in May 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.”
Furthermore, he added, “Increased demand, decreased supply beats out all the noise in the system and that will help us see these new highs in 2020.”
Eric Ervin, CEO of Blockforce capital also supports 20k this year for Bitcoin. He said “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.”
Ervin remarked on the fact that central banks are printing money at unprecedented rates and that this is part of the reason: “The fundamentals are lining up for a potentially explosive rally in the price of bitcoin.”
Others, such as Michael Conn co-founder of Zilliqa Capital, suggest that the big price rise will be supported by other activity: “I feel it will have a chance of approaching the $20k level because of fundamental growth in usage of the peripheral ecosystem.”
However, John Todaro of TradeBlock is less optimistic about $20,000, he said, “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.”