Many cryptocurrency traders and investors did not have high expectations from 2019, especially after the loud fall in the cryptocurrency market capitalization at the end of 2018. Nevertheless, the BTC rate stopped its downward head dive, and thankfully began to regain its positions. Last year, BTC grew by more than 100%, ETH by 35%, Litecoin by 78%, and many less well-known altcoins showed growth by hundreds and thousands of percent. All while many said this would be the end for cryptocurrencies! Impressive.
2020 is looking even more positive for BTC as well as for high-quality crypto projects alike. In the first half of January 2020, the Bitcoin exchange rate increased by 20%. This is a record high for the start of the year considering the past 8 years. According to analysts, at such rates, Bitcoin was last rising in price in 2012, eight years ago. The positive dynamics of its exchange rate in early 2020 was reflected in other major cryptocurrencies as well, in particular, Ethereum grew in price by 25% over the same period, and XRP grew by 20%.
In February, BTC showed a decline in value and analysts attribute it to the sale of an especially large batch of bitcoins by the US Marshals Service. On February 18, the Service auctioned 4,041.6 BTC, which were confiscated during criminal investigations, and at the time of this writing, the Bitcoin exchange rate is $8,923.20 according to CMC.
It is possible that the continued decline will soon lead bitcoin to its growth to $ 10,000. However, it is likely that this rally will be tied to the double bottom model described in classical technical analysis. The double bottom pattern implies a reversal, which most often violates the downtrend and transfers control to the bulls.
Here are the most significant events that we believe influenced the fundamental growth of bitcoin in early 2020.
- BTC made its first breakthrough despite tense relations between the USA and Iran, when both gold and BTC began their active movement. According to Galaxy Digital CEO Mike Novogratz, a political conflict in the Middle East has provoked instability in the stock market, which investors will prefer to wait out in more reliable assets. “The more I analyze this Iranian situation, the more bullish gold and BTC I become,” Novogratz wrote in his Twitter account.
- Next, the launch of BTC options; as we saw in early January, the exchange operator CME Group initiated the trading of options for bitcoin futures. The Block analyst Frank Chaparro said he is confident that CME’s entry into the Bitcoin options market signals a new stage in the development of the crypto industry. According to him, the Chicago Mercantile Exchange is one of the largest players in this segment of the financial markets, interacting with some of the most influential hedge funds and investors. Therefore; the launch of Bitcoin options is an important step in the development of the derivatives market, and serves as a powerful indicator for investors.
- Another big development in the beginning of 2020 is that Bitcoin comes to major retailers. Both Crate and Barrel Nordstrom and Amazon, owned Whole Foods, now accept bitcoin. It works by piggybacking on the digital scanners that many big retailers use to accept phone based payments, so while processing the payment in BTC the store cashier will be unaware the customer is paying with crypto while the merchant receives a real-time payment in the form of crypto or dollars, whichever they choose; so this is another big step towards bitcoin adoption.
- And next up Microsoft launches “ION” an open-source decentralized identity tool on Bitcoin blockchain, the first decentralized infrastructure implementation by a major tech company that is built directly on the Bitcoin blockchain.
- Then in February, VanEck report says institutional investors should invest at least part of their capital in bitcoin. VanEck experts believe that bitcoin has tremendous potential, and to some extent it can be called “digital gold.” The main advantage of bitcoin is shortage, as well as the fact it is very convenient to move.
- At the beginning of 2020 German Federal Financial Supervisory Authority (BaFin) reported that more than 40 banks are already interested in obtaining a license for cryptocurrency depository services. On January 1, 2020, an updated Anti-Money Laundering Law entered into effect in the country. The new law requires banks to have a license to provide customers with online banking services, including operations with stocks, bonds, and cryptocurrencies. “As soon as it becomes easier to buy and store bitcoin and other cryptocurrencies, we expect significant growth,” says Michaelis Offermann, head of SolarisBank.
So the beginning of 2020 turned out to be much more active than all previous years, and promises profits and more than traders could even dream about in the classic assets market. We believe that now is the time to take profits and open new longs on crypto exchanges.