The cryptocurrency field has been obsessed with the bull market in the winter of 2017, but as Bitcoin breaks through its all-time high of $19,655, the crypto world may be heading into unknown territory.
The combination of many factors has created the right environment for Bitcoin to surpass its 2017 high. During the spring of 2020, COVID-19 caused the market to collapse, and BTC instantly dropped to around $5,000, and then the prospect of a strong recovery drove new investments. And later this year, news that PayPal will support the buying and selling of cryptocurrencies, as well as the uncertainty brought about by the US presidential election, have further promoted the trend of Bitcoin.
But what will happen next? In recent weeks, Bitcoin has recorded a sharp rise. According to data from many exchanges, it has risen by as much as 45.8% in just one month, surpassing historical price highs. But is this rise sustainable? In other words, will this world’s most popular digital asset fall to the ground?
Relying on market value
It is worth noting that the market value of Bitcoin has skyrocketed along with its snowball price. On November 17, 2020, the market value of Bitcoin surpassed the highest mark in history. At present, this astronomical figure has surpassed PayPal, Netflix, Coca-Cola and Disney and other companies, and ranks among the world’s 18 largest commercial companies.
The greater the market value, the greater the possibility of a substantial price increase. The latest increase in Bitcoin’s market value has been driven by large investments by companies such as Square and MicroStrategy, as well as PayPal’s greater accessibility in providing digital currency to its 286 million user base.
Another thing that enhances the attractiveness of Bitcoin is the halving that occurred earlier in 2020, that is, the amount of Bitcoin released as a mining reward per block is reduced, so that the supply is also squeezed.
Changes in investor behavior
After Bitcoin’s 2017 rally, there was a major crash, and for most of the next two years, the crypto market was cheering up. However, investor behavior today seems to be different from 2017.
As shown in the figure above, Bitcoin has become a more popular asset for investors as it moves towards 2020. More wallets that usually buy and hold cryptocurrencies are turning to Bitcoin as a safe haven for crypto assets, while cryptocurrency wallets that participate in high-volume transactions are decreasing.
The graph also shows that there is a correlation between the slowdown in the accumulation of holders and the decline in the value of Bitcoin. In terms of growth, more long-term investment should mean more stability and sustainability. We can see that there is no sign that BTC’s long-term investment will slow down.
In addition, in the current pattern, there are also a large number of high-quality, trustworthy crypto exchanges. This further promotes the growth and confidence of new investors, and also helps protect the long-term development trajectory of Bitcoin.
Paving the road “to the moon”
“As early as March, I predicted that BTC might reach $50,000 by the end of 2020, and now more and more evidence shows this upward trend.” Antoni Trenchev, co-founder and managing partner of crypto platform Nexo, told Decrypt . “The market likes round numbers-Bitcoin broke through $16,000 in a few days, then $18,000, and the next stop is $20,000.”
“It is not impossible to reach $50,000 by the end of this year,” he continued. “This will be a record, not driven by fanaticism, but by those big institutions with forward-thinking and proficient in finance and technology to promote encryption technology into the mainstream.”
Will Bitcoin rush to the moon? Some commentators claimed that the cryptocurrency will reach a high of $300,000 within a year, and this has intensified speculation about the critical moment when Bitcoin becomes a mainstream application.
According to a report leaked by Citibank, the future growth of Bitcoin “may reach its peak in December 2021…it is expected to rise to $318,000.”
A report titled “Bitcoin: Gold in the 21st Century” stated: “Although it is unlikely, it only seems to have a 102-fold rebound from low to high (in percentage terms, it is the weakest rebound so far). The argument in favor of Bitcoin may be the most convincing in history.”
Volatility danger still exists
However, investors need to realize that although the outlook surrounding Bitcoin seems bright, the cryptocurrency world will see huge gains before devastating losses occur.
According to Fortune magazine The Ledger Newsletter, “Simply speaking, a plunge is inevitable-assets that have risen 400% should be corrected .” However, the article also pointed out that due to the amount of investment in the currency, the future The decline will not be as severe as before. At the end of the article, this may mean that future corrections may bring the price of Bitcoin to around $8,000 – instead of $2,000 – which also means that new investors need to wait for potential speculation opportunities before buying Bitcoin. .
Nowadays, Bitcoin looks stronger than ever. Therefore, some cryptocurrency commentators predict that the price of Bitcoin will rush to more than $300,000, but it is perfectly reasonable to drop to $8,000 in the same year.
As the world’s most famous cryptocurrency surpasses the highest price in history, it will enter uncharted territory. However, with the support of high-volume long-term investors and the support of international payment giants , the bull market in 2020 is likely to end people’s nostalgia for 2017.
Compilation: public account @萌眼金融
