Bloomberg has said that 2020 will end up being a very good year for bitcoin and other cryptocurrencies. They have announced that there are many signs that are signifying that we will have a very major bull run for bitcoin in 2020. According to Bloomberg, we have very strong fundamental and technical indicators that bitcoin will go past the al time highs of $20,000 that we had back in 2017. The latest report by Bloomberg has revealed that the company expects bitcoin to retest the previous $20,000 highs or even go past this record price.
This report has pointed out that the coronavarius outbreak has accelerated the maturation of bitcoin as an asset. This is because bitcoin has shown strength amid an economic fallout when equities and other financial assets were losing value. At the same time, there is an ever increasing demand from institutional investors who have been consuming a big portion of newly supplied bitcoins. At this point of the year, institutions have consumed approximately 25 percent of newly mined bitcoin and this is a big increase considering the fact that in 2019, only 10 percent of newly mined bitcoin was bought by institutions. This means that smart money is increasingly flowing into the cryptocurrency market.
This Bloomberg report has further said that something has to go wrong for the value of bitcoin not to increase. They have further stated that there is a high chance that the price of bitcoin will continue rising past the $20,000 mark and even the price might skyrocket to $28,000 by the end of the year. “Last year, the high was about $14,000, which translates into almost double in 2020 if rotating within the recent band, it means little in the big picture.”
Based on what they said in this report, the rapid growth of Tether (USDT) will be another factor that will accelerate the growth of bitcoin in 2020. In the May of 2019, its market cap was at the $4 billion level and one year later, the market cap of USDT has expanded to approximately $10 billion. The increase in the circulation and use of this stablecoin is an indicator of an increased adoption of cryptocurrency assets. The report has further stated that the increased interest in digital links to the US dollar shows the need to store and transact value using the world’s reserve currency without the need for an intermediary like a bank. The world is moving to digitalization very fast and this can be paralleled with the adoption of paper currency that happened many years back. We have a similar trend and this rapid move to financial digitalization will increase the usage of cryptocurrencies for every day transactions.
This bold prediction by Bloomberg is largely based on the fact that in the last 2.5 years, bitcoin has had a very good price action similar to what we had 2.5 years prior to the historic rise in bitcoin prices back in the December of 2013. On top of a nice price action and more stable bitcoin price, just a few weeks ago we had the bitcoin halving and this reduced the reward of mining bitcoin by 50 percent. This means that it is becoming more difficult to mine bitcoin and as bitcoin becomes scarcer, the price will have to rise.
Bloomberg has noted that this year, we have many factors that are favoring the rise of the price of bitcoin. We have strong technical and fundamental reasons that are favoring increase in value of bitcoin; the institutional participation is increasing and the bitcoin market is becoming a more mature and stable. In conclusion, it is very clear that this year we have many odds stacked in favor of bitcoin and we have very high chances that this will be a great year for bitcoin just as it has been pointed by Bloomberg.