The bitcoin price in 2020 is off to an excellent start. In fact, it’s the strongest start to a year since 2012. So what’s behind the bitcoin gains? There could be a few different factors driving the price this year.
Where will the bitcoin price go in 2020?
So far in 2020, the bitcoin price has recorded its best January gains in eight years, although it does show signs of slowing down. After passing $8,800, the cryptocurrency stalled, failing to hold that level and falling back down into the $8,700 range. The bitcoin price now hovers just under the highest levels it has seen in two months after nearing $8,900.
The bitcoin price in 2020 has climbed more than 20% so far and more than 12% over the last five days alone, according to CoinTelegraph. The cryptocurrency broke a key resistance level on Tuesday, and experts and enthusiasts have been watching with interest. Bitcoin is closing in on its 200-day moving average, but it started to cool off before reaching that level.
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Experts generally see the bitcoin price going even higher in 2020, although they disagree on the magnitude of the gains. Bitcoinist highlighted three possible routes for the bitcoin price in 2020, and all three point to more gains. The key difference between them is the pace of those gains.
Bitcoin Economics described the three price tracks:
There are 3 types of BTC price models:
✈️Power models state that Bitcoin keeps growing with the same decreasing speed.
🚀Moon models assume that Bitcoin grows at the same pace.
🏎️Classic models imply that Bitcoin’s growth decreases even faster than in the past. pic.twitter.com/VicydD2gsy
— BitcoinEconomics.io (@BitcoinEcon) January 15, 2020
Essentially, one model assumes that the bitcoin price will keep rising with the same decreasing pace, while the second assumes growth at the same pace, carrying the cryptocurrency’s price to the moon. The third model is the most bearish of the three and assumes that the bitcoin price growth in 2020 will decrease even faster than it has in the past.
What’s behind the bitcoin gains?
Perhaps the best way to speculate about where the bitcoin price will go in 2020 is to look at what’s been driving the recent gains. CNBC highlighted two main drivers of the price. Kenetic Capital co-founder Jehan Chu told the media outlet that the uncertainty involving Iran has been driving the bitcoin gains. Much of the uncertainty has ended as tensions with the U.S. started to ease, which could be one reason the bitcoin gains stalled.
He also mentioned the launch of exchange-traded bitcoin options by the Chicago Mercantile Exchange (CME), which saw very positive demand and drove strong bitcoin gains. The new options enable institutional investors to more easily invest in bitcoin, which is expected to trigger much more widespread adoption of the cryptocurrency.
There’s also one other event that’s driving the bitcoin price in 2020, and that’s the so-called “halving,” which will occur in May. Bitcoin miners discover new coins by solving complex math problems on their powerful computers. At this time, miners are being rewarded with 12.5 per every block they mine, but the rewards are cut in half every four years, which helps rein in inflation. The reward per block will be cut in half again to 6.25 new bitcoin for every block mined.
Every time the reward is halved, the supply of new bitcoin entering the market is reduced. Following past halving events, the bitcoin price has increased significantly. Thus, experts expect a similar gain later this year as well. Vijay Ayyar of cryptocurrency exchange Luno told CNBC that $15,000 to $16,000 isn’t out of the realm of possibility for the bitcoin price in 2020.