Home Crypto News Bitcoin’s “Curse of $20,000”: Will We See $20Ok Before Christmas?

Bitcoin’s “Curse of $20,000”: Will We See $20Ok Before Christmas?

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For some, it should be nearly irritating that after a push previous $18,000, Bitcoin appears to be in a more healthy place than ever earlier than.

The final time that Bitcoin was over $18,000 in 2017, it had been pushed there by a story of hype and FOMO (worry of lacking out) – everybody and their mom was clamouring to get a bit of the motion. Then, as quickly because the bubble was born, it burst, sending Bitcoin on a three-year journey to restoration.

Now, plainly the second of restoration might have arrived.

Indeed, Bitcoin has been sitting comfortably above $15,000 for many of this month. BTC has been solidly above $16okay for greater than every week, and the previous couple of days have seen robust motion previous the $18,000 mark. At press time, information from CoinMarketCap confirmed {that a} single Bitcoin was value $18,527.79.

For many, although, there may be an import?

Bitcoin’s “Curse of $20K”?

Why can we fixate on these numbers? After all, $20,000 isn’t so removed from, $19,947, and even $19,878. Still, for some purpose, $20,000 appears to signify a significant milestone for BTC.

Certainly, half of the reason being that individuals have been scientifically confirmed to have an irrational desire for spherical numbers, and in a world that operates on a quantity system that largely facilities round multiples of 10, seeing numbers with a number of zeroes on the tip is definitely a satisfying feeling.

There could also be different psychological elements which can be contributing to the anticipation of the $20,000. For instance, the identical set of phenomena which will have contributed to Bitcoin’s “Curse of 10,000” may be relevant right here: like $10,000, $20okay could also be a marker at which BTC (and different monetary markets) are likely to have stalled out up to now.

However, one other half of the explanation for the anticipation of $20,000 might be as a result of BTC didn’t fairly break by way of the $20,000 mark in 2017; due to this fact, something previous $20,000 is new territory.

“It’s Likely We Will See [$20,000] before Christmas.”

Indeed, “if you had said to me just a few weeks ago that we would soon be in touching distance of $20,000 – bitcoin’s all-time high – I may have voiced some doubts,” Simon Peters, market analyst at eToro, mentioned in an announcement shared with Finance Magnates. “Yet here we are, hovering around the $18,000 level, just $2,000 away from that legendary $20k mark. That’s a movement that could easily occur in just a few hours.”

In a separate remark to Finance Magnates, Peters mentioned the run that has led to BTC’s present value level was “exceptional”: “a further 7.5% price increase would put bitcoin at its all-time high of $20,000, which is not beyond the realms of possibility to achieve this week and likely we will see this price level before Christmas,” he commented.

Simon Peters, market analyst at eToro.

What’s driving the worth of Bitcoin up? According to Peters, “it’s simply supply and demand.”

Hodlers Are Getting Greedy: “on the Supply Side, There Is Less Bitcoin in Circulation,”

“On the supply side, there is less bitcoin in circulation,” he defined. “Since the market crash in March this year, the amount of bitcoin being held on exchanges is continuously decreasing.” Indeed, a number of reviews earlier this month confirmed that the quantity of BTC being saved on exchanges was reaching its lowest level in months.

What does this imply? “This activity suggests investors are moving their bitcoin to their own storage and ‘HODLing’ crypto for the long term instead of trading to take advantage of any fluctuations in the price,” Peters mentioned. “Therefore, investors that are willing to sell bitcoin can command a higher price for it.”

In different phrases, HODLers are holding out for a giant pay-off, an element may point out that BTC is in for an enormous sell-off when the $20okay threshold is crossed.

Demand for Bitcoin Is Increasing

Still, an obvious improve within the quantity of demand for Bitcoin may take in half of the influence of such a sell-off: “in terms of demand, we have seen in recent months that central banks globally are increasing monetary supplies in an effort to reduce the economic fallout caused by the coronavirus pandemic,” Peters mentioned.

“Due to its finite supply, some investors are viewing Bitcoin as an inflation hedge, which was highlighted in particular by Microstrategy and Square – two listed companies who added bitcoin to their reserves for the first time this year.”

Still, “I wouldn’t go as far to say that bitcoin is a true safe haven yet because these assets are generally uncorrelated or negatively correlated with the economy as a whole,” he continued. After all, allow us to not neglect: “in March this year, we saw bitcoin crash at the same time as stock markets did, following global lockdowns. However, as time goes on and the asset matures, it may well move into its own.”

“The General Rebuttal That Bitcoin Is Too Volatile Doesn’t Really Hold Weight Anymore.”

All the identical, the stimulus and quantitative easing that many governments around the globe have put into motion following the unfold of COVID-19 appear to have made non-inflationary belongings (together with Bitcoin) extra engaging.

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After all, QE is prone to have a significant inflationary impact on money in the long run: Ed Nwokedi, Chief Executive at actual property tokenization platform RedSwan CRE, advised Finance Magnates that “there is a lot of dry cash sitting around in bank accounts generating zero yields,” he mentioned. “If this money is not moved into a more stable environment, inflation will eat away at the purchasing power of the assets.”

 

Ed Nwokedi, Chief Executive at actual property tokenization platform RedSwan CRE.

Of course, it could definitely be argued that Bitcoin, with its well-known volatility, is hardly a ‘more stable’ surroundings for worth storage.

However, eToro’s Simon Peters believes that “the old-aged arguments around Bitcoin’s volatility and real-world use cases also seem to be being chipped away at.”

“The general rebuttal that bitcoin is too volatile doesn’t really hold weight anymore, especially when you consider that a fair number of S&P 500 stocks have been more volatile this year,” he mentioned.

“We’ve also seen moves towards greater adoption, with the likes of PayPal allowing [its] customer base to now be able to buy, sell and hold Bitcoin. With 350 million registered users, this represents a huge number of potential new users entering the crypto ecosystem who may have previously been averse to investing on unfamiliar exchanges or brokers.”

Bitcoin as a Tool of “Portfolio Optimization”

Therefore, plainly, whereas progress is sluggish, Bitcoin is turning into an more and more necessary piece of investor portfolios.

Indeed, “What we see driving this bullish market in Bitcoin, is the narrative of Bitcoin as an alternative asset for portfolio optimization,” mentioned Daniel Kim, Head of Revenue at SFOX, to Finance Magnates.

However, Kim doesn’t imagine that Bitcoin is a ‘safe haven’ or ‘hedge against inflation’ a lot as it’s an instrument of income.

“Companies, investors, and individuals are accepting and seeing Bitcoin as an alternative asset to include in their portfolio or balance sheet to help diversify and improve their returns; and less of Bitcoin acting as a safe haven,” he mentioned.

 

Daniel Kim, Head of Revenue at SFOX.

However, this may increasingly imply that Bitcoin operates in extremes of vicious and virtuous cycles: “with that, the rally can shortly end when everyone begins to take profits,” he mentioned. In different phrases, so long as BTC is popping a revenue, everyone seems to be glad; however when profit-taking occurs, BTC may even see purple for some time.

“Ethereum is One of the Biggest Benefactors of the Increasing Inflow of Investors in the Digital Asset Space.”

Profit-taking isn’t the one factor that might grind the rally to a halt. Simon Peters advised Finance Magnates that “in terms of what could end this rally, as some Bitcoin positions begin to crystallize, we have started to see some of this liquidity move to the larger-cap altcoins.”

Indeed, Scott Freeman, Co-founder of JST Systems, advised Finance Magnates that “everyone is moving into Bitcoin, especially as the price inches closer and closer to $20K, and this bullish mentality is spreading outwards to other tokens in the ecosystem.”

“Ethereum is one of the biggest benefactors of the increasing inflow of investors in the digital asset space, with its price surpassing the $600 mark on Monday,” Freeman continued. “I expect that this movement into altcoins will only continue as the marketplace matures and continues to attract all types of investors.”

Simon Peters added: “we saw a similar situation in 2017 at the end of the Bitcoin bull market where the likes of Ethereum and XRP rallied to all-time highs. Some of the larger altcoins are now at significant lows versus Bitcoin and may present opportunities for investors.”

Beyond Markets, Bitcoin Has Some Obstacles to Overcome

Bitcoin nonetheless faces bigger hurdles exterior of the markets themselves.

Indeed, Anton Altement, Chief Executive of Osom.Finance, advised Finance Magnates that “the risks are the same as they have been historically, but there are two which are particularly worth highlighting — (a) regulatory and (b) end of pandemic.”

 

Anton Altement, Chief Executive of Osom.Finance.

“While we have seen more positive rhetoric by the regulators, no one has yet fully embraced this asset class. There is still a meaningful risk of larger regulators turning negative on the asset class which will curb the appetite of the institutional players,” he mentioned.

Additionally, “the way that the end of the pandemic will look like will define the trajectory of QE curtailing,” he mentioned.
“A reduction in QE will slow down inflation which is likely to lower the demand for ‘safe-haven’ assets” that might embody Bitcoin.

However, “importantly, while the regulatory risk can materialize any time, the factors stemming from the end of the pandemic won’t manifest themselves in the nearest future.”

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