BTC/USD: Will 2020 Bring Clear Vision To The Oldest Cryptocurrency?

BTC/USD: Will 2020 Bring Clear Vision To The Oldest Cryptocurrency?

FOREX.com  | Jan 16, 2020 05:24

To simplify, each of the last three years has had a distinct “theme” for the overall cryptoasset markets:

  • 2017 was the peak mania/bubble period, especially in the 2nd half of the year.
  • 2018 was the year the bubble popped, leading to deflating expectations and prices.
  • 2019 was the year of recovery and “green shoots” for future use cases.
  • As we flip our calendars to 2020, the top question for traders and investors is whether the exciting technological groundwork laid in 2019 will pay dividends for investors, users, and developers.

    State of the Crypto Market

    Far from the heady, halcyon days of late 2017, the cryptoasset markets are far tamer and more grounded as of writing in December 2019. After peaking above $800B at the start of 2018, the overall market capitalization of all the tokens in circulation has fallen to roughly $200B.

    Total Market Capitalization

    The majority of the “value” lost has come from so-called “altcoins” which include many of the overhyped ICO projects built in Ethereum’s smart contract ecosystem. While Bitcoin has been more than cut in half from its December 2017 peak, it’s fallen less than many competitors, leading to an increase in Bitcoin “dominance” or the portion of overall market value attributable to the original cryptocurrency.

    Percentage Of Total Market Capitalization

    As the chart above shows, Bitcoin now represents about two-thirds of the overall cryptoasset market capitalization, with rivals such as Ethereum, Ripple (XRP), and Bitcoin Cash losing market share. Generally speaking, the above chart can serve as an indicator of so-called “alt seasons”: when Bitcoin’s dominance is trending higher, crypto traders prefer to hold Bitcoin itself, whereas a turn lower in Bitcoin could signal that altcoins are poised to outperform.

    Bitcoin’s relative outperformance from 2018-19 is poised to extend further in 2020

    Bitcoin Chart

    Bitcoin is scheduled for a “halving” of its block reward in mid-May, where the reward for successfully “mining” a Bitcoin block (which takes place approximately every 10 minutes) will fall from 12.5 BTC to 6.25 BTC. This will bring Bitcoin’s overall supply inflation rate down from about 3.7% to 1.8%. Historically, Bitcoin has shown a tendency to rally in the wake of previous “halvings,” though it’s difficult to draw any strong conclusions off a sample size of the two occasions.

    Developers continue to work on improvements to Bitcoin’s protocol, with projects like the Lightning Network, for lower-value off-chain transactions, and Taproot, a privacy upgrade which is gaining momentum.

    Regulatory policies will play a major role in Bitcoin’s performance in 2020

    More than incremental technological improvements though, regulatory policies will play a major role in Bitcoin’s performance in 2020. For Bitcoin bulls, the proverbial “White Whale” is the approval of a Bitcoin ETF (exchange-traded fund) in the US that would make it easier for everyday retail traders to invest in the cryptocurrency. Despite numerous proposals over the last year, US regulators have failed to greenlight a fund yet. If such a fund is approved in 2020, it would be perhaps the biggest possible bullish catalyst for Bitcoin, opening the floodgates for retail and institutional capital to flow into Bitcoin.

    Technically speaking, Bitcoin is breaking out of its near-term downtrend off the June peak near $14k. The cryptocurrency recently broke above its 7-week (~50-day) moving average and bulls will now turn their eyes toward the 29-week (~200-day) moving average. Beyond that, bulls may turn their eyes toward the psychologically-significant $10k level, followed by the Q3 highs starting around $12k. On a longer-term basis, the key level of horizontal support to watch will be the Q4 lows near $6400.

    BTC/USD Weekly Chart

    This article is a complement to our full 2020 Market Outlook report - please download the full report for more insight into our views for major markets this year, including bold predictions from the research team!

    Original Post

    FOREX.com

    Related Articles

    Latest comments

    Add a Comment
    Please wait a minute before you try to comment again.
    Discussion
    Write a reply...
    Please wait a minute before you try to comment again.

    Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
    Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
    Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
    It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
    Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

    English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
    Sign out
    Are you sure you want to sign out?
    NoYes
    CancelYes
    Saving Changes

    +