What keeps Bitcoin under $ 20k?

For several weeks, Bitcoin has been getting closer and closer to $ 20,000.

It’s almost silly: According to data from CoinMarketCap, Bitcoin has gone as high as $ 19,816, so close to $ 20k that in some respects it might as well to be $ 20,000. Yet, the final push beyond that magic number has not yet taken place.

However, for the time being, Bitcoin’s position above $ 19k has been stable since Monday. Before that, BTC has steadily risen from just under $ 13,700 a month ago to where it is today, and it doesn’t seem to be showing any signs of slowing down anytime soon.

“I no longer see structural concerns that would prevent Bitcoin from exceeding $ 20K and reaching much higher valuations by 2021.”

Therefore, many analysts seem to believe that Bitcoin is likely to cross the $ 20k mark within the next few weeks.

In fact, Kadan Stadelmann, Komodo’s Chief Technology Officer, told Finance Magnates that “he wouldn’t be surprised to see bitcoin go over $ 20,000 by the end of the year.”

Similarly, market strategist and CFA Alex G. Piré told Finance Magnates that although Bitcoin hasn’t yet managed to break out of $ 20k, it’s only a matter of time, although there may be some retracements along the way.

In fact, there have already been numerous smaller retracements that have kept Bitcoin at $ 20k over the past two weeks. “After hitting $ 19,187 on 11/23, we have seen predictable profit taking after a strong rally that has recovered from late 2017 highs,” Piré told Finance Magnates.

“We then rerun the test reaching $ 19,693 on 11/29, but the profit-taking was much less significant at that time, finding an upper limit of $ 18K. Based on that, I am optimistic that BTC can reach and potentially exceed $ 20K, but I believe this will trigger some profit taking and further consolidation which will set the stage for further upside moves next year. “

In other words, “I no longer see structural concerns that would prevent Bitcoin from exceeding $ 20,000 and reaching much higher valuations by 2021,” he said.

However, Kadan Stadelmann also sees some hurdles along the way to $ 20k: “As BTC approaches $ 20K, I expect there will be several fixes along the way,” he said. “Bitcoin has always had a volatile history, so I wouldn’t be surprised to see drops of around 30% before it rebounds and continues on its path to $ 20K and beyond.”

What keeps Bitcoin between $ 20k?

But what is stopping Bitcoin from reaching $ 20k in the meantime?

Alex Green, managing partner of Voor Group, told Finance Magnates that “numerous factors play into the price of cryptocurrencies”.

“An interesting technical point of view explored is the idea that Bitcoin mining represents a kind of dilutive tax,” he said. “That is, when miners start mining more, they have to exchange that bitcoin for fiat denominations in order to pay for the cost of energy and computing power denominated in fiat currency – for this reason, as mining rates go up. , we see a delayed outflow as miners try to monetize their rewards. “

“This requires a reverse reactionary influx to keep the price rising,” Green explained. “The exposure to Paypal and the resulting influx probably supported the recent bull run, however I have a feeling that the technical pressures around the outflow of miners have pushed it to the limit of the number we have seen in recent weeks.”

David Merry, CEO of Coin Journal, also pointed to “exposure to PayPal” as a major factor in Bitcoin’s price: he told Finance Magnates that “Bitcoin has seen great growth since September with investors reacting to the ‘acceptance of cryptocurrencies by PayPal and Square, signifying a general acceptance of cryptocurrencies “.

“In addition to this, there was the entry into the market of institutional entities. However, some investors are waiting and seeing how Bitcoin can compete with commodities like gold, others have been put off by the exaggerated forecasts in recent years, preventing Bitcoin from still reaching $ 20k. “

Roadside retracements for $ 20k and up

Therefore, it may take some time for Bitcoin to start building firmly beyond the $ 20k mark.

Voor Group’s Alex Green told Finance Magnates: “I believe we will see just over $ 20,000, maybe 21,000, but not $ 25,000 for at least another couple of months, if ever before 2022,” he told Finance Magnates.

And there is a possibility that the retracement could be much larger than a few hundred dollars: “if this ceiling stays and the value is lowered and we settle between $ 13-15k, then it will stay there until another influx event. it will stimulate more mining, “he said.

This could happen “probably somewhere in the middle of late 2021 to coincide with the Fed’s change in monetary policy,” he said. “The Fed will need to inject more liquidity at that point to reach its 2% inflation target, and that event is a potential target for mass inflows due to the unrelated nature of Bitcoin’s assets.”

“The demand for bitcoin is increasing here and the price reflects the interest of the big players.”

The rapid rise from around $ 14,000 to nearly $ 20,000 this month has certainly caused some analysts to make comparisons between this rally and the price rally that brought Bitcoin close to $ 20,000 at the end of 2017, a rally that resulted in a sudden crash. of the market.

Komodo’s Kadan Stadelmann said that while “we are seeing very similar trends right now at all-time highs of 2017”, this time there are some important differences: “This time around it is happening in a much more controlled way which is supported by strong fundamentals. “, has explained.

For example, “we are seeing a daily supply deficit for the first time in bitcoin history: around 900 BTC is mined every day (around 6,300 per week) and institutions like Greyscale, for example, acquired 7,350 BTC during the week of the year. November 23 -30 °. The demand for bitcoin is increasing here and the price reflects the interest of the big players “.

2021 could be a big year for BTC

Therefore, Stadelmann predicts big things for Bitcoin in the future: “I predict that the next headlines will be about large entities buying and holding satoshi, or fractions of bitcoin, which will be as impressive as the large amounts of bitcoin they are buying now.,” He said. .

In fact, “I believe that in 2021 we will see a substantial increase in the institutional adoption of bitcoin and cryptocurrencies, as well as greater efforts to support the infrastructure that underlies blockchain interoperability,” explained Stadelmann.

“Government spending is rising to record highs, and I think investors will continue to seek hedging against this spending and its subsequent effects on the economy – I believe they will do so through bitcoin. My prediction is that increased institutional interest will elicit an emphasis on decentralized value exchanges in early 2021. “

Market analyst Alex Piré also sees a strong reason for BTC moving higher in 2021: “The structural case for BTC is strong with institutional interest from major banks such as Goldman Sachs and Citi to name but a few” he said. He also stressed the “ease of trading for retail investors” through “platforms like Paypal and Robinhood that embrace BTC and other cryptocurrencies should allow BTC to push higher in 2021”.

Voor Group’s Alex Green also pointed out that there are also signs that demand for BTC in retail markets is increasing: “Almost everyone who has a 401 (k) or passive market investment is now exposed to Bitcoin via PayPal” he said.

“At the institutional level, this will guide a broad line of research on the subject and on esp[loration of broader use cases for blockchain,” Alex explained.

Additionally, “I believe the advent of ETH2.0 will also start to really define bitcoin itself as a store of wealth and nothing more–it still has the volume and first mover advantage to keep that seat in alt crypto assets, and I expect to see more institutional excitement, especially in the first of 2021 in the VC space surrounding blockchain-based startups.”