Bitcoin is an EXTREMELY interesting position on the day of writing (20/09/19) as it continues to trade within a period of consolidation. The cryptocurrency is currently trading at a price of around $10,187, at the time of writing.
In this article, I’ll firstly cover a range of topics that I believe will influence Bitcoin in reaching my target of $25,400 in 2020 and then analyze Bitcoin on the weekly and daily charts so you guys can follow along!
Regardless of the recent period of consolidation that has started since mid-June 2019, many analysts are still positively bullish on Bitcoin over the long term as we cast our horizon toward 2020 and beyond! There are a host of reasons as to why analysts are starting to get increasingly confident in Bitcoin that ranges topics from Miners’ confidence to the Global Economic Recession that is looming.
The only problem that Bitcoin currently faces is the fear that it just might drop beneath the lower boundary of the current descending triangle which would result in a breakdown of the price toward the $6,100 level - not a situation that anybody would like to see. If this does occur, it could send some of the predictions in this article wayward, however, by the end of 2020 I still believe there is a strong potential for BTC to create a fresh ATH and reach the $25,400 level.
Let us start with why Bitcoin is in a strong position to reach this target.
Miners’ Confidence All-Time Highs
My followers will be totally up-to-date with this reason as I had written about it not too long ago. To simplify, the Hash Rate has now created a fresh ATH - which translates into the fact that the BTC miners’ confidence is also at an ATH. Take a look below;
We can see that in today’s session, the hash rate created a fresh all-time high above the 100,000,000 TH/s level. This shows that BTC miners are more confident in the future of Bitcoin than they have ever been before - as they continue to add their computing resources toward the Bitcoin network to secure and mine the blocks on the blockchain.
If miners were not confident about the future prospects of Bitcoin, they would simply devote their mining resources to another blockchain as mining on BTC would no longer be profitable. The fact that the hash rate is increasing just shows that miners are happy with their rate of returns and are confident that it will continue in the future.
We should all take notice of this as miners are the top-tier market players that have a strong understanding of the entire Bitcoin network. Once they become confident, it eventually trickles down into the sentiment of the entire market.
Confirmed TX Per Day On The Rise
The number of daily transactions on the Bitcoin network is also on the increase and is approaching ATH levels;
This shows that people are still using Bitcoin to make transactions on a daily basis. This proves that BTC has not really died down, instead, people continue to use BTC on a daily basis behind the curtains of the mass media.
As more and more people continue to use BTC, the network grows and, in turn, this has a strong positive effect on the price.
Total Trading Fees At Lows
Another interesting statistic is the fact that the total trading fees are close to all-time lows. Take a look below;
This shows that fees on the BTC network are still in a low and manageable situation, even with the number of confirmed transactions increasing per day. This presents a great condition for BTC to be able to rise and break past its ATH price for the simple fact that TX fees should not increase as quickly as they had done during the 2017/18 Bull run. During this time, TX fees soared to a level where people were paying over $50 for any transaction - a situation that is not at all sustainable.
Hopefully, on the next bull run - the tx fees do not get too high which should allow BTC to break $20k.
Baakt BTC Futures On The Horizon
After many delays, the Baakt Futures Exchange has been given the green light and is set to launch this month on September 23rd. The futures exchange was supposed to launch at the start of the year but was met with some significant delays. However, this ICE-backed exchange has long been anticipated as it will offer institutions and individual investors alike a safe and secure way to purchase physically-delivered BTC futures.
Furthermore, Baakt have taken steps further in opening their custodial solution known as Baakt Warehouse
This custodial solution will allow investors to keep their cryptocurrency secure through Baakt that is insured by a $125 million insurance policy!
Possible BTC ETF Before Or During 2020?
A regulated ETF has long been touted as the sole catalyst that will allow BTC to soar well past its previous ATH price. This is because a regulated ETF will provide a plausible option for Wall Street and investment firms to start entering into the BTC economy. Without these sorts of instruments, the majority of institutional investment firms will not even touch an asset class such as cryptocurrencies.
Unfortunately, the CBOE has recently withdrawn the proposal to the SEC for the proposed VanEck/Solid X BTC ETF. The final decision was to be expected during October, however, their proposal has now been withdrawn, and no reason has been given. However, it is not unreasonable to suggest that they have started to change their focus as they have recently started to offer a limited BTC ETF for institutional investors only. This is not accessible to the general public and has only sold a total of 4 BTC in the short time it has been live - something rather worrying as it shows that institutions are still not interested in this type of ETF.
On the other hand, there are still 2 other ETF’s on the table that are waiting for approval by the SEC which are the Wilshire Phoniex ETF (decision expected at the end of September) and the Bitwise Asset Management ETF (decision expected end of October).
Although these ETF’s are likely to get rejected, like their predecessors, I anticipate many more proposals to be put forward to the SEC in 2020 and one of them should be able to bring their ETF in-line with the SEC regulatory concerns. If this does happen, we will certainly see a MASSIVE surge in the price of Bitcoin.
Let’s address the pink elephant in the room! The problem of scaling has been a very long-standing problem within Bitocin politics, and we are still nowhere closer to increasing the 7 transactions per second (TPS) rate that BTC currently can achieve.
7 -10 TPS is nowhere near enough throughput for the blockchain to be able to sustain a large number of users on the network. This usually causes a backlog in transactions and causes the transaction fees to rise SIGNIFICANTLY. The low throughput is perhaps one of the strongest reasons why BTC never managed to continue further above $20K as at that point in time, the transaction fees were far too high for BTC to be usable.
Whether it is another layer-1 solution (such as SegWit) or a layer-2 solution (Lightning Network) we REALLY need this problem to be addressed during 2020 for us to be able to rise past $20K. Find out more about the scaling solution in this article.
Global Economics Situation Fears As Central Banks Slash Interest Rates
The final reason that I will cover that relates to Bitcoin reaching my $25,400 target, is the overall looming recession that is long overdue. We all know how business cycles work, on average they occur every 7 years, however, during this business cycle we are long overdue for some form of “bust”.
Well, it seems that the cracks are starting to show within the economy as Central Banks around the world start to implement new monetary policies by slashing interest rates. When a Central Bank slashes interest rates, this makes borrowing much cheaper which allows for individuals and businesses to take out loans at a reduced rate which encourages further consumption in the economy - leading to growth. However, on the flip side, it can cause excessive growth which results in inflation and a reduced purchasing power for the currency.
Firstly, the European Central Bank has cut its own interest rates this month by a total of 10 basis points (BPS) to bring the target rate down to -0.5%. Furthermore, they even introduced a fiscal policy in which they will inject 20 billion EUROS into the economy each month through the process of buying bonds and other assets, a process known as Quantitive Easing (QE) - in the hope to stimulate the economy further.
The fact that the ECB is introducing both monetary and fiscal measures into the economy speaks volumes about the lack of confidence that the Central Bank has toward the outlook for the future. They believe that growth has slowed down and the economy needs a little ‘bump’ to keep the growth increasing.
In fact, even more worryingly, the Federal Reserve, the US Central Bank, has also introduced monetary policy yesterday by cutting its target rate by 25 BPS to reach a new interest rate target of 1.75% to 2%. If the world's largest economy is starting to cut interest rates to spur growth, we must not be in the best position at all.
The good news is that many believe when the recession hits, people will start to move their assets out of the traditional stock markets and move them into stores of value such as Gold and, now, Bitcoin!
Developer Activity Falls as of 2019, However the Price continues to climb
Data from Santiment suggests that the development activity has risen as the 2019 progresses, with development heights seen as of early September 2019. The development activity fell rapidly around the time of publishing this article, however, it is starting to show signs of rebounding! Nevertheless, the social volume (blue sticks) remains a similar levels to early-mid 2019.
We can clearly see a notable spike both in development activity and social media at the time when Bitcoin reached 2019's ATH.
Let us take a look at the market and see the resistance on the way up toward the $25,400 target for 2020.
Bitcoin Price Analysis
BTCUSD - Long Term - Weekly Chart
Taking a look at the weekly chart above, we can clearly see the period of consolidation that Bitcoin is trading within - not being able to break further than $11,800 and remaining above $9,400. The outcome of this consolidation period will determine how high BTC is likely to travel in 2020. If the market does drop beneath the consolidation pattern, we could see BTC correcting toward $6,100, which would make it very difficult for BTC to reach $25,400 in 2020. However, if it manages to break above the consolidation - things could look very beautiful for BTC prices in 2020.
The first significant level of resistance to break above is located at $12,000. Above this, higher resistance is then expected at $13,000, $13,409 (bearish .618 Fib Retracement), $14,000, $15,000, $16,187 (bearish .786 Fib Retracement), $17,000, $17,840, and $20,000.
IF Bitcoin can break above $20K, this is where things start to get interesting. The first level of resistance above $20K is expected at $20,281. Above this, higher resistance is located at $22,000, 23,449 (long term 1.414 Fib Extension) and then at the target rate of $25,424 (long term 1.618 Fib extension).
NOTE: For BTC to reach the target rate, it will only need to increase by 150% - a figure that is not too outlandish in the cryptocurrency markets.
Let us take a quick look at the market in the current condition and highlight some short term support and resistance levels.
BTCUSD - Medium Term - Daily Chart
What Has Been Going On?
Looking at the chart above, we can see that BTC remains in the descending triangle pattern. Some analysts believe it is a symmetrical triangle, but I am confident that it is a descending triangle. This is bad news as descending triangles typically resolve themselves toward the downside - meaning a break beneath the lower boundary.
Bitcoin has dropped by a total of 3% today to break beneath $10K but has found support at the 100-days EMA.
Where Are We Headed?
The RSI has recently dropped beneath the 50 level which shows that the sellers have taken control over the market momentum. If the selling continues, we can expect immediate support toward the downside to be located at $9,679 and then at the lower boundary of the triangle at $9,400.
Beneath the triangle, further support is then located at $9,136 and $8,942 which are the short term downside 1.272 and 1.414 Fib Extension. Beneath this, strong support is located at $8,773 which is provided by the bearish .786 Fib Retracement and bolstered by the 200-days EMA.
Alternatively, if the bulls can rebound at the lower boundary of the triangle and begin to push higher again, resistance can be found at the upper boundary of the triangle around $10,500. If the bulls break above the triangle, the bullish continuation is on and we can expect initial resistance at $11,000, $11,308 and $11,500.
There are a plethora of reasons above as to why I believe BTC can indeed soar to create a fresh new ATH at $25,400 during 2020. This is still a very conservative estimate as it requires only a 150% price increase to reach the target from the current price levels. Bitcoin could certainly storm much further than $25,400 if a few of the issues mentioned above come to fruition during 2020.