Editor's Note: This article comes fromChain reference (ID: lianneican), Author: Internal Reference Jun, reprinted by Odaily with authorization.
Editor's Note: This article comes from
Chain reference (ID: lianneican)
Chain reference (ID: lianneican)
, Author: Internal Reference Jun, reprinted by Odaily with authorization.
Only half a month has passed in 2021, and Bitcoin has staged a surprise and frightening drama.
At the end of 2020, Bitcoin broke through $28,000 as expected. Then what people did not expect was that the price increase of Bitcoin did not stop, but continued to break through milestones one after another, and finally broke through the record high of US$41,910 in one fell swoop, which was only a "finishing kick" from US$42,000. It took only 8 days to reach this record high.
Where there is a surprise, there is a shock. When people imagine that Bitcoin can continue to create miracles, after Bitcoin fell below $40,000 in the early morning of January 9, the price of Bitcoin fell again by more than 12% in the early morning of January 11. The lowest was 33,447 US dollars, which is equivalent to a sharp drop of nearly 6,000 US dollars in one day.
The price trend of Bitcoin in the past 30 days
The volatility of bitcoin prices at high levels has further intensified, leaving many people confused. People who already hold Bitcoin are considering whether to sell or continue to hold it. And those who are now ready to join the Bitcoin feast, do you think it is too late?
While the world's first and largest cryptocurrency is at an all-time high, is there still a chance for investors to get in on the crypto bandwagon?
We might as well review the several plunges in the history of Bitcoin and its performance in 2020. Perhaps this will give you a more comprehensive understanding of Bitcoin and a clearer judgment on its future trend.
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Three Flash Crashes in Bitcoin History
On February 10, 2011, the strong interest of investors pushed the price of Bitcoin to $1, which is why it was called the "Dollar Parity Day". After that, Bitcoin started a volatile trend.
Bitcoin's first plunge occurred in 2013. At the end of November that year, it broke through $1,000, reaching a peak of $1,127.45. However, the good times did not last long, and by mid-December, the price of Bitcoin had plummeted by nearly 50%. The most notable feature of this round of bubbles is that the decline is relatively gentle but lasts for a long time: in the following year, the price of Bitcoin fell to $172.15, and this stalemate remained for several years.
The third plunge of Bitcoin occurred in mid-March 2020.
Bitcoin’s decline was halted by a $8,500 support point just as another surge was about to begin, as fears of Covid-19 forced the entire crypto industry to collapse.
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2020 crash after boom
After experiencing a bear market in 2018, Bitcoin slowly came out in 2019. On January 1, 2020, the price of Bitcoin reached $7,238. Subsequently, Bitcoin ushered in a new round of rise from early January to mid-February, reaching nearly $10,300. However, just as BTC approached this level, the bullish wave faded and a pullback ensued.
The crash is believed to be due to the crypto industry's correlation with the stock market, which tumbled just days before the digital currency's slump. But unlike the stock market, the crypto recovery started when cryptocurrencies bottomed out.
BTC recovered to pre-crash levels in about a month and a half, in early May. The coin has been trading sideways throughout the first half of the summer, fluctuating between $9,200 and $9,500. This changed in late July, when BTC finally broke through the $9,500 resistance level and shot all the way to $12,000.
This level kept it low until early September, when gold prices fell again, this time hitting support at $10,000. About a month later, Bitcoin began to surge, soaring to around $19,000, reaching the long-awaited $20,000 mark in mid-December.
BTC has been setting new records every other day for nearly two weeks, and finally reached an all-time high of $24,209.66 on December 20, 2020, which happened to be the day before the three-year anniversary of the previous historic $20,000 mark . The first time was in 2017.
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What Caused the 2020 Quotes
Unlike other markets, where the reasons for rallies are often easy to find in fundamentals, the same is not the case with cryptocurrencies. While it is sometimes easy to pinpoint the cause of a bullish trend, the market's advance is often independent of available information.
However, there is one trend that started in 2020 that may be responsible for all this - institutional engagement. There is generally a positive correlation between Bitcoin’s mainstream adoption and price increases.
In 2020, Bitcoin has succeeded beyond its price surge. Bitcoin has always attracted the attention of institutional investors. Firms like Grayscale and Microstrategy have reported increased demand for Bitcoin, purchasing large quantities of it on behalf of their clients.
Many predictions suggest that the scarcity resulting from this interest could be one of the important factors leading to Bitcoin's price surge in early 2021.
It’s worth mentioning that this year marks Bitcoin’s third halving, which cut its block reward in half. The halving took place on May 11. Before that, the block reward was 12.5 BTC per block. Rewards are now only $6.25.
This has also led many to believe that the price of BTC will increase, as it did after the previous halving. Of course, there are some who deny this theory, such as Vitalik Buterin of Ethereum. Buterin noted that there is no evidence that halvings cause price spikes, other than that historically major price increases have occurred about 18 months after halvings.
PayPal, the world's largest online payment service, recently announced a major development that could lead to a surge in the price of Bitcoin. PayPal has revealed plans to add support for cryptocurrencies within its own platform. Bitcoin and some other currencies were the first to hit the market.
PayPal already allows U.S. citizens to start using cryptocurrencies on its platform, and the same functionality is expected to follow elsewhere in the world in 2021. Given PayPal's reach and credibility, this is a huge move for Bitcoin. At the very least, the company's decision has raised awareness and interest in bitcoin, and may even change some skeptics' minds.
Of course, Bitcoin has performed better than any other asset during the Covid-19 crisis, which is its purpose after all — to provide an alternative when all else fails.
The upshot of all this is that Bitcoin has set a new record of its own. That's impressive for any cryptocurrency. However, when Bitcoin does this, it is literally a game changer.
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What will happen to Bitcoin in 2021
Through the above review, it is not difficult for us to find out. On the one hand, Bitcoin has been on a rollercoaster ride, reaching unimaginable heights and quickly falling to horrific lows.
On the other hand, no one knows when the peak will be reached. While most other financial assets have decades of history and charts to analyze, Bitcoin is relatively new and has less history in its charts. Is $40,000 the peak? Is it $50,000? In a recent JPMorgan research note, analysts believe that Bitcoin could reach $146,000 in the long run, but to get there, Bitcoin The volatility of must be greatly reduced.
Either way, for sure. There is a high demand for bitcoin price predictions 2021. Expect 2021 to be the year Bitcoin really thrives and impresses.
A price tag of $50,000 by the end of the first quarter of 2021 is not out of the question. If this is the case, I expect BTC to grow further, reaching $80,000 by the end of Q2 (June 30, 2021). Summer has historically been a time of year when price volatility slows down, so there may not be as much action in the third quarter.
If this positive trend continues in the fourth quarter, the $90,000 price level is not out of the question.
The stock-to-flow model is very accurate when it comes to predicting the price movement of tokens. At a fundamental level, Bitcoin's scarcity is highly correlated with the network's value, especially after its rate of production declines.
Finally, there is also rising demand from institutional investors looking to hedge against inflation, which could lead to a price doubling within months of reaching this recent milestone.
