Bitcoin Price Predictions For 2020 And Beyond
When the price of Bitcoin passed the $10,000 level almost 2 weeks ago, there was optimism that 2020 could be a strong year for both Bitcoin and the broader crypto market. In terms of market psychology, passing and staying above the $10k level is important in order to challenge and surpass the all-time intraday high in Bitcoin of $20,089 set in December of 2017. However, is this newfound optimism in Bitcoin warranted from a technical analysis perspective?
Bitcoin Technical Analysis: A Historical Perspective
To understand where Bitcoin is currently at from a technical analysis perspective, it is important to understand its broader price history in terms of uptrends and downtrends. Since its inception and until today, Bitcoin is on a price uptrend since it is currently valued near $10,000 each whereas in its early days in 2010 it traded for less than $0.01. While prices are trending upwards over the long-term, Bitcoin has been in a medium-term downtrend since January of 2018, one month after setting its all-time intraday high of $20,089 (Line C in chart). On December 15th of 2018, almost one year after setting its all-time intraday high, Bitcoin reached an intraday low of $3,191.30 (Line E in chart), which is currently its lowest price since the beginning of 2018.
Since the beginning of 2019 and until today, there has been a short-term uptrend and a short-term downtrend. The short-term uptrend occurred in the first half of 2019, when Bitcoin surged in the second quarter from $4,105 to $10,817, while reaching an intraday high for 2019 of $13,796.49 on June 26th (Line B in chart). During the second half of 2019, a short-term downtrend was established, reaching an intraday low of $6,540.05 on December 18th (Line D in chart).
Bitcoin Technical Analysis: Current Situation
So did the short-term downtrend that has been in place since July of 2019 break recently? We could be experiencing a new short-term uptrend in Bitcoin since the first significant sign has occurred that the short-term downtrend has ended. Downtrends are classified by series of lower highs (LH) and lower lows (LL), and the downtrend cannot be considered broken until price goes above the lowest significant lower high (LH).
In this case, the lowest significant lower high is the intraday high of $10,021.79 that occurred on October 26th of last year (Line A in chart). The price of Bitcoin passed this technical level of $10,021.79 earlier this month on February 9th, which is the first significant signal or confirmation that a new uptrend is being established. However, does this mean in terms of technical analysis that a new bull run is on and that we will see new all-time highs in short order? Not necessarily, since Bitcoin’s price could stall before it reaches the 2019 intraday high of $13,796.49 (Line B in chart). Bitcoin passing the price level of $10,021.79 (Line A in chart) was a significant technical signal, but going above the 2019 intraday high of $13,796.49 (Line B in chart) or below the intraday low of $6,540.05 that occurred on December 18th (Line D in chart) would be even more significant and further confirmation that we are in a medium-term uptrend or downtrend. Additionally, going above the all-time intraday high of $20,089 (Line C in chart) or going below the intraday low of $3,191.30 that occurred on December 15, 2018 (Line E in chart), would provide an even greater level of significance compared to the aforementioned technical levels.
While the price of Bitcoin could still go either way in terms of technical analysis, introducing other historical and fundamental factors could shed some light on which direction the price of Bitcoin is likely to go. The first factor to consider is recently daily volume, which is highlighted by the green circle (Figure F) in the chart. One can see that daily volume is at its highest levels ever, which is significant since large bull runs in the past have been accompanied by historically high levels of trading volume up to that point. Conversely, large reductions in the market price of Bitcoin have typically been accompanied by low levels of trading volume. Another important factor to consider is the Bitcoin mining reward halving that is likely to take place in May or June of this year. For every successfully mined block of Bitcoin, the miner’s reward will fall from 12.5 Bitcoin to 6.25 Bitcoin once the mining reward is reduced. This has an impact on the amount of new Bitcoin that is being added to its overall supply on a daily basis, which impacts Bitcoin’s scarcity and price should demand remain the same. The mining reward for Bitcoin has been reduced twice so far in its history (November 28, 2012 and July 9, 2016), and each occurrence was both preceded and followed by bullish price action as can be seen in the image and table below:
Bitcoin Price Predictions For 2020
Another very important factor to consider is the age of the current bear market and recovery. In the chart above, each line represents monthly closing prices as a percentage of its previous all-time high, with the 2014–16 bear market and recovery (orange line) having a previous all-time high of $1,156.14 and the 2018–19 bear market and recovery (red line) having a previous all-time high of $20,089.00. The lines of both bear markets tend to move fairly close with each other for their first 16 months, with both bear markets reaching their monthly low in their 13th month following its prior all-time high. However, in months 17 and 18 of our current bear market and recovery (red line), there was a high degree of divergence from the previous bear market (orange line), which suggested at the time that we could be testing all-time highs considerably faster than during the previous bear market and recovery. From month 19 to 24 of our current recovery (red line), we cooled off a bit and converged back to the previous bear market and recovery (orange line). However, the 25th month of our current recovery (red line) performed well relative to the previous bear market and recovery (orange line).
At this point, the age of the current bear market and recovery in Bitcoin is 25 months long, which represents two thirds of the length of the last bear market and recovery in Bitcoin that occurred from January of 2014 until December of 2016, lasting 3 years. During the last bear market and recovery, prices truly started to recover during the 29th and 30th month, which would represent May or June of this year if applied to our current bear market and recovery.
So where do we go from here? I believe that the price performance of Bitcoin for our current bear market and recovery (red line) will continue to diverge above and converge back down to the price performance of Bitcoin during our previous bear market and recovery (orange line). As a result, and as represented by the green targets in the chart above, my prediction is that the price of Bitcoin will be $14,062.30 by the end of June 2020 and $20,089.00 by the end of December 2020.
Bitcoin Price Predictions For 2021 To 2023
I realize that trying to predict Bitcoin’s price so far out into the future might be a bit difficult, but I thought that it might be fun to apply the same logic that I used in the predictions for 2020 to future years as well. I am aware that making price predictions so far out in the future will inherently have a lower degree of accuracy. To account for this, I tried to be conservative in most of my assumptions. My predictions are represented by the green targets in the chart above or specified in the graphic below:
I made my Bitcoin price predictions for 2020 and beyond, do you care to speculate as well? Will Bitcoin be profitable in 2020? Will it reach new all-time highs this year? How high do you think Bitcoin will go in 2021? Please leave your comments below!
Bitdollar Fund
My project, Bitdollar Fund, is a long-term believer in cryptocurrency and aims to reach consensus for important issues such as the sentiment of the market (bear or bull market) in order to adjust the allocations in our collectively managed cryptocurrency portfolio. We will pool resources, both financial and intellectual, for the benefit of our entire community. Through the Bitdollar Fund platform, we will procure the best investment ideas from the brightest minds in our field by providing our new secondary token, Crypto Pro, as an incentive. Collectively, we intend to raise the level of debate on the merits and faults of major cryptocurrencies like never before.
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Nick Kitcharoen is Founder and CEO of Bitdollar Capital, which launched its private sale for Bitdollar Fund, an incentivized worldwide investment club for major cryptocurrencies. Both planned collectively managed funds from Bitdollar Capital aim to provide clarity to the cryptocurrency community by guiding fundamental analysis and facilitating research, while also providing a relatively safe place for those that are new to cryptocurrencies to get started. Nick has a background in corporate finance and trading in financial markets and was most recently Founder and CEO of Acumen Algorithms LLC, a formerly registered Commodity Trading Advisor, where his sole focus was the development of trading algorithms based entirely on technical analysis.
