Well folks, the time has come: Bitcoin has risen and surpassed $ 16k for the first time in more than two years.
The move above the $ 16k threshold comes after a week of slow and steady gains; last Friday, BTC was already showing signs of heading to $ 16,000 as a continuation of a strong rally that began earlier in the week.
While the upward curve has been soft throughout this week, the gains have been consistent and some analysts believe a run up to $ 20k could be just around the corner.
What is Bitcoin pushing up?
On-chain metrics are conducive to a BTC price increase
Simon Peter, an analyst at the social investment platform eToro, said that part of Bitcoin’s upward movement has to do with the technical fundamentals of BTC.
“The recent adjustment to the difficulty on the chain must have contributed to the latest price hike,” he explained in a statement shared with Finance Magnates. “On Tuesday it fell to 16,878 trillion, the second largest decline of all time.”
This decrease in mining difficulty could also explain the hash power explosion that has taken place since the beginning of this month.
“With fewer operating costs to cover, miners are under less pressure to sell, which creates greater demand for the crypto asset; and bitcoin, like gold, is susceptible to price movements of supply and demand, “continued Simon.
And, as a “Twitter poet” and well-known television broadcaster, Max Keizer always says: “the price follows the hash rate”.
Therefore, Simon Peter is optimistic: “since we have already passed $ 15,000 … my next target that investors need to focus on would be $ 17,500”.
Big finance and big technology are hugely entering Bitcoin
Komodo Chief Technology Officer Kadan Stadelmann told Finance Magnates that the push above $ 16,000 has a lot to do with demand from the financial sector.
“The price of bitcoin has risen in part due to the fact that major players and investors in the financial sector are showing increasing interest in bitcoin and showing an appetite for acquisition,” explained Kadan. “This can be seen in the latest BTC money allocations from Grayscale, Square and other investment firms that are making the leap to BTC.”
In addition to large companies making direct investments in Bitcoin, Paypal also recently paved the way for further retail adoption with the announcement that it will allow its users to buy and spend cryptocurrencies through its platform, a factor many analysts say. that Bitcoin is still experiencing a push from.
Kadan Stadelmann stressed that “Paypal’s decision to increase weekly purchase limits from $ 10,000 to $ 20,000 is another positive sign for its cryptocurrency adoption”.
Dr Garrick Hileman, head of research at Blockchain.com, told Finance Magnates that “Big Tech is making crypto more widely accessible and secure to buy, attracting hesitant interested but stuck investors,” adding that “Square’s recently reported $ 1. , 6 billion in bitcoin sales is just a start. “
But what drove this institutional and big-tech interest in cryptocurrencies in the first place? Hileman told Finance Magnates that the rise in cryptocurrency interest from institutional players that occurred this year can be traced back to the US Office of the Comptroller of the Currency decision to allow banks to provide services. custody for cryptocurrencies.
“Big Finance is encouraged by the US government’s green light on bank custody, and there is a rush to provide customers with simple bitcoin investments,” Hileman said.
$ 20k in cards before the end of 2020?
What are the prospects for Bitcoin?
The consensus among many analysts seems to be that $ 20k is in the cards, it’s just a question of when.
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In fact, “I think we will likely see the price of bitcoin rise to $ 20k and beyond in the short term,” Kadan Stadelmann told Finance Magnates.
“Many investors refer to $ 20k as the latest all-time high of monthly candles, which is an important benchmark on the charts. With sentiment at $ 13.8k, this month is on track to close above, “he continued.” Either way, it could potentially be the highest closing monthly candle in BTC history. “
Garrick Hileman also said that Bitcoin “could easily” exceed the $ 20k limit, although he drew an important distinction between the expected $ 20k move and the $ 20k hit that occurred in late 2017.
“The recent price action is different from the crazy rush we saw in late 2017,” he said. Where the 2017 run at $ 20,000 appears to have been largely driven by an extreme, short-lived retail ad campaign, this $ 20k run appears to be coming from a more sustainable place: “We’ve built and consolidated towards that goal. in the past two years, “he said.
“Nobody can say for sure, but it wouldn’t surprise me to see bitcoin hit $ 20k before the end of the year.”
“A short-term sell-off is likely.”
However, even if BTC hits $ 20k before the end of 2020, there could be bumps along the way.
“A sell-off is likely in the near term, as many investors and traders will seek to profit from it,” Kadan Stadelmann told Finance Magnates. “Bitcoin’s current increased volatility and market fluctuations are both a sign of such dynamic price movement.
“However, it shouldn’t negatively impact price and long-term value,” he continued.
After all, there have been some recent and significant bullish indicators in the market.
For example, “the price of Bitcoin typically closely follows trends in other financial markets, such as stocks,” Kadan said. “Stock prices have stagnated over the past few weeks as Bitcoin has produced gains. This could be a sign that more people are looking to enter the cryptocurrency market that they weren’t previously involved with. However, if we expect the long-term price correlation trend to continue, there could be a price correction for BTC. “
Don’t Fear the Re (aper) -Tracement (More Cowbell, Anyone?)
Simon Peter also stated in his recent statement that he “remains optimistic about bitcoin”, but that he would also “warn that a retracement is on the cards”. However, this retracement “shouldn’t be feared”.
What will cause the retracement? In addition to investors looking for a simple profit, Peter said that some of the money that went into Bitcoin could be dispersed into other alternative assets before Bitcoin reaches $ 20k: “Investors, having seen their stake in bitcoin, are likely to appreciate. , they will look to take some of the profits and reinvest them in altcoins or keep them in cash, “he said.
Garrick Hileman also said that a possible sale is nothing to fear in the short term: “Clearances are always possible,” he said.
“We have seen in the past that the price of bitcoin can drop significantly and sometimes it takes a while to start moving again. But Bitcoin, unlike many other asset bubbles that rise and crash and never return. plus, it has constantly rebounded to new highs. We believe it will continue to be increasingly integrated into more people’s daily financial lives. “
“History shows that the BTC price was able to recover from massive sell-offs.”
Kadan Stadelmann also pointed out that even under the worst circumstances, Bitcoin has always recovered in the end.
“It’s important to look at macro trends,” he said. “History shows that the price of BTC has been able to recover from huge sell-offs.
“It is also important to remember how the price of BTC has historically increased due to the reduction in supply that occurs after the halving of events. Even though buying demand remains relatively flat, the newly created offer is around 900 BTC per day, while previously it was around 1800 BTC per day. “
Additionally, Kadan pointed out that “something to consider is that not only is BTC increasing, but BTC’s total market capitalization and dominance is also increasing,” a factor he believes “makes possible a confluence of indications for the move momentum with BTC. “
In fact, TradingView data shows that Bitcoin’s dominance has increased from around 59.6% to 65.8% over the past month.
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