BTC to end 2020 in style: 3 key factors predict Bitcoin price surge

[syedrasool2011]

Three key macro factors raise the probability of a prolonged Bitcoin bull market, but a short term correction is very likely.


The price of Bitcoin (BTC) has increased by nearly 30% since late June, from $8,905 to just under $11,500 as of press time. Following the strong rally of the dominant cryptocurrency, three macro factors point at an optimistic medium-term trend. These macro factors hint at a positive medium-term to long-term price cycle but suggest that in the near term, momentum will fade and a consolidation phase will happen.

As Cathy Wood, CEO of Ark Invest, discussed on the In the Know podcast, there is technically little resistance between $13,000 and BTC’s all-time high of $20,000. Wood noted that BTC might see a new trading range between $10,000 and $13,000, which would establish a healthy consolidation phase:

“That $13,000 [level] is important because if we were to get through that, then in technical terms, there would be very little resistance and we would probably be on our way back to the peaks we saw in late 2017 — so, around $20,000. Now, we’re not sure if that is going to happen. We could stay in a new trading range, just at a little bit of a higher level than the recent six to 10. Maybe we’re in the $10,000 to $13,000 range. Nonetheless, a breakout.”

Whether Bitcoin remains in the $10,000–$13,000 range for an extended period remains uncertain. In the past three years, BTC has tended to consolidate throughout September to October and rally during mid-November. Considering the activation of the block reward halving on May 11, the probability of an uptrend in November to December remains high.

Fading dollar benefits Bitcoin
A persistent narrative around the long-term prosperity of Bitcoin is the decline of the United States dollar. In recent months, primarily due to the pandemic and the U.S. economy struggling to reopen, the dollar’s value has fallen against other reserve currencies.

On July 31, Lee Hardman, currency analyst at Mitsubishi UFJ Financial Group, said the sell-off of the dollar was “relentless.” According to Supriya Menon, multiasset strategist at Pictet Asset Management, various macro factors including the soaring number of COVID-19 cases and the uncertainty around the November presidential election were contributing to the dollar’s weakness.

Meltem Demirors, chief strategy officer of CoinShares, believes that periods of economic uncertainty and dollar weakness would likely benefit Bitcoin, like they do gold:

“So where does bitcoin sit in the economic cycle? during periods of economic uncertainty and dollar weakness, #Bitcoin is likely to benefit in the same way as gold. If bitcoin’s financialization continues, it will be unable to remain insulated from the financial system.”

Whether the falling momentum of the dollar has already had its full effect on the price of Bitcoin remains unclear. The U.S. dollar has already dropped to a two-year low, and in the near term, analysts anticipate a dollar recovery.

But two variables that could cause the dollar to drop further are low-interest rates and the European Union’s sizable stimulus package. The euro has outperformed the dollar in recent weeks, as investors found the EU’s 750 billion euro recovery fund compelling. Atop the aggressive fiscal policies of Europe, the U.S. economy’s path to recovery has not been strongly established. Patrik Schowitz, global strategist at JPMorgan Asset Management, noted:

“U.S. economic outperformance relative to the euro area and Japan (no longer) seems guaranteed, at least over the next few years, given the faltering virus response. […] The shrinking of its interest rate advantage makes the USD less appealing and pushes investors to consider deposits in other currencies. These cyclical factors won’t turn around in a hurry and the US dollar likely has room to fall further.”

The fading trend of the dollar coincides with the expectations of higher inflation rates in the intermediate term. If many perceive Bitcoin as a store of value and a potential hedge against inflation, Federal Reserve Chairman Jerome Powell’s upcoming speech could strengthen the image of BTC for the long term.

On Aug. 27, Powell is expected to deliver a speech at a virtual Fed conference and address soft inflation. For now, the markets are not counting on the Fed to lead significant changes on its fiscal policies. As such, even if the Fed says that it might let inflation rates run higher for a while, it might not have a profound effect on BTC.

Gold correlation
Possibly due to the falling dollar, gold and Bitcoin have seen a more correlated price cycle in recent months. According to data from Skew, Bitcoin and gold have rallied in tandem since mid-July and have similarly pulled back simultaneously since the first week of August.

More Details: https://cointelegraph.com/news/btc-to-end-2020-in-style-3-key-factors-predict-bitcoin-price-surge

[Astra]

Lately, many factors point to the possibility of a sharp rise in prices in the cryptocurrency market. While there is some correction in the bitcoin rate, however, in the last quarter of the outgoing year, I think that the growth of bitcoin, ethereum and other potential cryptocurrencies will be significant.
The fall in the dollar and the rise in the price of gold and bitcoin could accelerate significantly if we enter a period of severe global economic crisis.

[Joyjoyce0]

One of the reasons bitcoin will surge towards the end of the year is the crisis the world is facing. As national currencies are depreciating in value, digital currencies like bitcoin and XRP, Ethereum etc, will become a safe haven for investor to edge their funds. The increase in the value of gold and bitcoin is a good loiter to this.