Bitcoin exchange rate forecast for 2020: analysts’ forecasts, important events for Bitcoin cryptocurrency in the current year
People who currently hold bitcoins or are going to purchase them as a long-term investment are probably wondering what the nearest prospects are for this cryptocurrency. The editorial staff of Profinvestment analyzed the situation, taking into account the opinions of experts and the upcoming events related to “digital gold”. This forecast will help you make the right choice.
Important events for Bitcoin cryptocurrency in 2020
2019 was generally positive for the Bitcoin exchange rate – over the year, the price of the currency has approximately doubled. 2020 promises to be no less eventful, there are at least five reasons for this:
- Halving. Approximately every four years, the reward that is given for the found block for the blockchain is halved. So far it is 12.5 BTC, but will soon change to 6.25 BTC. Opinions about how this will affect the course are divided into opposite ones – but if we proceed from previous halvings, then after them the value of the cryptoasset has always increased. In connection with halving, some experts predict the growth of Bitcoin to $ 50 thousand by the end of 2020.
- Schnorr / Taproot soft forks. According to the developers of Bitcoin Core, they are already on the way and promise to be the most important updates in the entire history of the existence of the cryptocurrency. Forks are aimed at improving the interchangeability of coins and expanding the functionality of the network, which will contribute to the growth of interest in it.
- Strengthening the correlation of bitcoin with gold. Both are expected to grow as investment assets – both could renew their highs in 2020. This is partly due to the outbreak of the coronavirus, the Iranian-American conflict and other events forcing people to look for an alternative to traditional money.
- Lightning Network. The Lightning Network has been considered a convenient solution for faster and cheaper microtransactions for several years, but it may be in the spotlight in 2020. The fact is that the largest number of bitcoin transactions are concentrated on cryptocurrency exchanges, and the Lightning Network can help reduce the load on the blockchain – which is important when the volume of speculation grows noticeably due to halving.
- Institutional investors. Trust in cryptocurrencies does not form overnight; it took years to gain it. And now we can say with confidence that many institutional investors are ready to accept Bitcoin and make large investments. In January 2020, the media cited calculations according to which in 2019 the amount of investments from investors in bitcoin exceeded $ 600 million.
The price of BTC rose noticeably earlier this year following tensions between the US and Iran, and some argue that the cryptocurrency has begun to play the role of a safe asset, a safe haven for savings, just like gold. However, others believe that the reason is the increased hash rate – more and more miners are adding their power to the network. The so-called crypto winter at the junction of 2018 and 2019 led to a drop in the hash rate of the Bitcoin network, but its further growth significantly outstripped the price growth.
Bitcoin price forecast from analysts
Basically, experts’ forecasts for the BTC rate are positive. Bitfinex CTO Paolo Ardoino believes that the price will not fall below $ 6,000, and by the end of this year it will be at least $ 20,000. Fintech investor Crypto Finance Mark Bernegger calls the minimum price $ 22,000, and the maximum price $ 55,000. this indicator is influenced by the macroeconomic situation. Traditional investors are showing more and more interest in cryptocurrency as it offers good hedging opportunities.
Blockstream CEO Adam Back expects a long-term cost of $ 25,000 to $ 50,000. And the founder of the Binance crypto exchange, Changpeng Zhao, does not give specific predictions, but believes that the crypto market will face high volatility with a bias towards a bullish trend due to the influx of institutional investors.
BitMEX CEO Arthur Hayes named the minimum cost of $ 3000 and the maximum $ 20,000. The lower limit is the break-even level for miners. And the upper one, suggesting the return of the previous record high, upon reaching it, will remain unchanged for some time, after which it must break higher.
McAfee Associates founder John McAfee predicts bitcoin will rise to $ 1 million by the end of 2020. The prospects for the coin are increasing even faster than he expected, he said. BitBull Capital CEO Joe Deepaskuale is convinced that there is a future behind crypto transactions, but there are too many influencing factors that make it impossible to predict the exact price of BTC. In his opinion, over the next five years, the course could be anywhere in the range from $ 10,000 to $ 100,000.
Mathias Dorta, founder of ICO-Informer, calls himself one of the Bitcoin bulls. He believes that by 2030, BTC will become the official reserve currency in at least several countries around the world, and this probability increases as it approaches the final figure of 21 million. At the moment, experts call the lack of an adequate level of security the main obstacle to the global adoption of cryptocurrency.
Writer and cryptanalyst Brandon Kittem is betting that Bitcoin will be worth $ 75,000 in 2020 with a market cap of $ 1.3 trillion. The forecasts of the co-founder of Fundstrat Global Advisors, Thomas Lee, are much more modest – $ 25,000 by the end of the year.
What determines the bitcoin rate
While Bitcoin is often compared to stocks or bonds, there is still a significant difference. There is no corporation behind bitcoin, which means that there are no public balance sheets on the financial condition of the company, so that conclusions can be drawn about the prospects of investing in it. Also, monetary policy, monetary inflation, etc. are not applicable to bitcoin.
It follows from this that the value of a cryptocurrency is formed due to a combination of such factors:
✅ Competition. Of course, Bitcoin is the most famous cryptocurrency, but besides it, there are dozens of other currencies and tokens, and each wants to win back the interest of users. In terms of market capitalization, BTC still dominates by a wide margin over its closest competitors.
✅ Supply and demand. The cryptocurrency protocol allows for the creation of a fixed number of new coins. New BTCs appear on the market when miners form blocks from transactions, but the rate at which they are created is gradually slowing down. The total possible number of coins in the Bitcoin network – 21,000,000 – also has an impact. Once they are all issued, the price will depend on how easy it is to use BTC in various transactions, how legitimate and in demand this coin is.
✅ Use on exchanges. The more popular the crypto exchange becomes, the easier it is for it to attract new members. And having “captured” a significant part of the market, it can dictate its own rules for adding certain currencies. If an exchange has Bitcoin listed, then in most cases it complies with regulatory requirements, even though cryptocurrencies are still operating in the gray zone.
✅ Mining costs. Although bitcoins themselves are virtual, their production consumes quite real electricity. In the process of mining, complex mathematical problems are solved. The one who first brought the solution receives all the transaction fees accumulated since the extraction of the previous block, plus a portion of new coins. The more participants connect to the mining network, the more difficult the task becomes to maintain a conditional 10-minute interval between mined blocks. And, accordingly, more electricity is consumed.
✅ Stable management and forks. Fork – a change in the underlying software, leading to the creation of a new currency on a separate blockchain. A soft fork is a minor change in the network that does not lead to a fork in the new currency. Bitcoin has no central authority and security is entirely dependent on miners and developers. Forks usually split the Bitcoin community and create problems that need to be addressed.
✅ Legal and Regulatory Issues. Regulators are struggling to figure out how to classify such virtual assets. The Securities and Exchange Commission (SEC) classifies cryptocurrencies as securities, while the US Commodity Futures Trading Commission (CFTC) classifies BTC as a commodity. There is also a tendency in the market to use crypto as an underlying asset for futures, exchange-traded funds, etc.
The BTC market is also dependent on many other things, news background. For example, if the government of a large country speaks out against the regulation of cryptocurrency, then the price will fall (this was the case with China). The cost also fell when the Silk Road drug-dealing site, which accepts BTC as payment, closed. In some cases, the price can be deliberately knocked down by “whales” – large traders selling large volumes of cryptocurrency.
When choosing a bitcoin trading strategy or thinking about investing in long-term investments, you need to be careful. This is a very risky asset; In this volatile and unpredictable market, even experienced traders often lose money. All forecasts that are given for Bitcoin for 2020 are tentative in nature – of course, each assumption is justified, but they cannot be taken as an accurate guide to action.