Bitcoin price has become the center of attention after its spike from lower $4,000s to $14,000 just a few weeks back. As an all-time high (ATH) is being expected, bitcoin has gone into sleep again and now the price is largely consolidating around the $10,000 mark. Despite the hindered bull-movement, the prospect of bitcoin hitting a 2017-like bull run again is very much on the cards.
While talking to BlockPublisher, the Co-Founder of Plouton Mining and Head Trader at Kanos Capital Management, Cole Walton laid out several factors which point at bitcoin gaining a bull-run again in 2019. Pointing out the first bead in the string, Cole stated:
A healthy consolidation around $10k will put bitcoin in position for another leg-up in price the second half of the year.
Erratic price spikes and drops are witnessed too often in the volatile bitcoin world. As bitcoin was going up, it was attracting new investors in its ecosystem. This often leads to FOMO which brings along with it those people as well who are just here to make a quick buck. Consolidation around a price mark makes sure a healthy ecosystem is built overall and only those people stay who trust the asset with some certainty.
With the block reward splitting in half to single digits at 6.25 BTC per block next May, the supply of bitcoins minted each day is going to meaningfully decrease. With bitcoin, supply shocks are even more impactful because of the large number of people known as HODLers who have not sold their bitcoin for years despite its volatile price swings.
The bitcoin ecosystem is expected to witness a “halvening” event in May of next year. Halvening in the bitcoin network occur after around an average of four years. It essentially halves the reward given to the miners for solving the cryptographic puzzle and adding a new block in the record of transactions.
Currently, the reward is 12.5 newly-minted bitcoins. After May next year, the reward price will drop to 6.25, hence decreasing the supply of new coins in the network. The aim of this whole thing is to tackle the issue of inflation. Based on this decreased supply, it is highly expected that the price of bitcoin will witness an upward swing.
There are also a number of products coming online that are settled in physical bitcoin, not cash, that will add incremental demand at a time when supply is shrinking.
With a more healthier ecosystem getting established and regulation stepping in, adoption of bitcoin is on an upward slope. The crypto ecosystem is also becoming more healthier when it comes to online payments. The lightning network is just one block in this set of improving the broader crypto-payment world.
With cryptos like Libra now being announced, the exposure of cryptos is also increasing along with the demand. The inter-linkage of incremental demand and upcoming supply-cut are expected to play their respective roles in a prolonged bitcoin bull-run.
Finally, we expect more and more institutions to “get off zero” and buy bitcoin for the first time. When we get trough some key technical levels around the yearly high, ~$14k and all-time high $20k, it could reignite a retail-fueled blow-off top that could take the price to levels we have not seen yet.
Institutions have largely stayed away from the volatile world of bitcoin. But with increased demand and adoption, regulators are finally stepping in to regulate this space for better investor protection in this illicit-activity-filled space. The U.S. lawmakers have also shifted their focus on Facebook’s Libra and the broader crypto world.
It has only been a decade since bitcoin rose on the global financial scene. With progress being made at the regulatory end, the path for institutions to come into this world is also being made clear. If that happens, it is expected that a huge amount of investment will flow into bitcoin network which will likely take it price to levels never seen before.
As Cole summed it up:
We do not wish for this outcome and would prefer healthy price action like we have had through key levels so far this year, but based on human psychology and bitcoin price history, we very well could see a repeat of 2017 going into December 2019.
Although the dust of the spike above $10k from lower $4ks has settled, the end of 2019 is still a long way out. With the uncertainty associated with the bitcoin world, it can be safely assumed anything can happen in this space.
The speculation-based model makes bitcoin a highly volatile asset and hence the room for extreme spikes and drops. At the time of writing, the digital asset is standing $10,827 while showing a strong 2.45% increase in the past 24 hours alone. The hopes for crossing an ATH have although diminished, but they aren’t finished for good yet.