Bitcoin at $ 40,000 may not be as far away as it looks
With the last few weeks of pure buying, it became clear that you had better have Bitcoin in your portfolio. The cryptocurrency is now trading for more than $ 11,500, not only consolidating into five digits, but surviving an abull-trap and disengaging itself from the stock market in the process. Going by this change in market sentiment, and with the 2020 scenario falling from halving, $ 20,000 will not be the finish line, but a pit stop.
Before that escape, Bitcoin was stuck in a restricted trading channel. Transferring between $ 9,000 and $ 10,000 for almost two months, the cryptocurrency’s realized volatility was as low as 23%, a low point it had not experienced since March 2019. The worst was that this lateral movement started before and persisted after the halving of May 2020, and caused a “tethering” effect with a declining stock market. However, all of that was undone as of July 23, culminating a few days later with the $ 10,000 break.
Now, as the larger market remains the same, but feelings, certainly in the crypto-market, change, the price only tends to go up from here. According to a Ecoinometrics reportgiven previous halvings projections and persistent market conditions, a price of more than $ 40,000 for Bitcoin could be expected before the end of 2020. Taking this trend into May 2021, a year since halving, Bitcoin could fly as high as $ 387,000. Not bad.
Although the projections are certainly mouth-watering for hodlers and traders, let’s take a minute to understand this increase. In 2019, a year before halving, there was much debate about whether or not halving was ‘priced’, implying that Bitcoin’s rise above $ 10,000 in H2 2019 was the result of the inevitable action of bulls in halving. Regardless of the consensus of this debate, the report states that, looking at the big picture, in the current market, “it is a good time to buy Bitcoin”.
Bitcoin’s post-halving projection | Source: Ecoinmetrics
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Observing the two previous halvings, in 2012 and 2016, respectively, the price rose, after the fact, in “10x and 100x”, respectively. With the price currently above $ 11,000, the halving trajectory would put Bitcoin’s price at the aforementioned high of $ 40,000 at the end of the year, $ 100,000 in April 2021 and $ 387,000 in May 2021. Even in lower end of the spectrum, says the report, “Bitcoin could reach $ 100,000 a year from now on.”
Even if crypto-markets were isolated from the rest, that might look great, but it isn’t. Bitcoin is universal and ubiquitous as a currency, but now also as an investment. Retail and institutional investors are looking at cryptocurrency as a hedge against growing economic uncertainties, specifically on three fronts.
First, with more and more fiat money printing each day, the value of money retention time is decreasing. Second, due to the need to discharge money, since any asset that can sell its value is growing in number, especially assets with a rigid capitalization [oferta fixa], it is no wonder that gold is now trading above $ 2,000 an ounce.
Third, the price drop after halving and after the March crash in the Bitcoin markets made it a prime candidate to be the preferred asset, not only as a real world currency, but also as a global hedge.
The report concluded, calling it unequivocally “financial advice”, in which it also reeks of common sense:
“If you don’t have any, start shopping now. If you already have one, you probably don’t have enough. If you are an institutional investor, you need to have a long exposure. ”