Bitcoin (BTC): grow potential by the end of 2020

The cryptocurrency market benchmark, BTC, was one of the firsts recovered after the financial markets collapse in March 2020 caused by the COVID-19 pandemic. Perhaps only the NASDAQ index can equal it in the growth rate after the fall, while the majority of the stock indexes including SMI & DAX, as well as gold, can’t show similar growth. Since the 1st of January 2020, BTC rose by more than 23%, which makes it favorable for medium-term investment.

The reasons for BTC growth as well as the reasons why cryptocurrencies and tokens exist still and increase popularity for investments are these assets are an excellent alternative investment and optimal for risk-tolerant investors. The cryptocurrency market and Bitcoin are influenced by fundamental aspects that don’t take a role in classic markets. Not only the supply-demand balancing, price & trading volumes but also such factors as hash rate, cryptocurrency mining complexity, electricity cost, mining equipment evolution, industry legislative regulation, and many others are important for cryptocurrency market analysts and traders.

Thus, the cryptocurrency market is an independent investor-friendly one including the global instability periods, and here's why.

New safe haven asset

Over the past years, Bitcoin displayed the haven asset properties and investors prefer to buy it under geopolitical risks or economic problems, as in the case of the COVID-19 pandemic consequences. Alike a gold, for the last year Bitcoin rose amid the US-China trade war, it also rose in January 2020 after the Middle Eastern US military bases missile attack. The fact of Bitcoin collapsed in March 2020 along with classic markets means only that all the market’s investors cashed out and shelter of the crisis, significantly reducing their portfolios. Thus, Bitcoin proved its vitality and more and more investors are willing to have the cryptocurrency share in their portfolio to improve its beta coefficient and increase potential returns.

It is large, institutional investors, so-called ‘whales’ who will set the cryptocurrency market tone. Not those retail ones who bought crypto on the hype of 2017, but ‘smart money’ who grasp the industry and blockchain technology perspectives. At the same time, amid increasing Bitcoin futures and options trading the popularity of cryptocurrencies among institutional investors is increasing now.

I expect them to enter the market over the next few years, particularly because the most important tool intended for them the custodial services for safe asset storage, is being created now. Swiss banks creating digital repositories provide this service already. Along with friendly legislation, it’s the reason for more and more ‘smart money’ to enter the cryptocurrency market and for its capitalization to grow over time.

These are fundamental features point the prospect of BTC price to rise in the coming years. As for the technical analysis, the chart below shows that BTC has a good chance to grow up to $14,000 by the end of 2020.

As you can see at the chart de facto for the year and a half BTC is within the wide range with borders of $3,500 – $14,000. Within this range, price formed the fourth internal Fibo retracement pattern (IP4), described in my book ‘The Complete Guide To Comprehensive Fibonacci Analysis on FOREX’ (ISBN 978-1607967606), and went to be my research for MFTA degree.

Price target by the end of the year

This pattern’s essence is as follows within the correction price reaches the retracement level of 61,8%, then roll-back to the level of 14,6%.

If the analyst sees a bounce back from the level of 14,6%, he can count on retesting the level of 61,8%, reached earlier. This is typical for the FOREX market, stock indices, and the cryptocurrency market. Those deep and structural corrections are more common for the cryptocurrency market.

On the way to the level of 61,8% (~ $13,300), the price will meet the key resistance cluster at $11,000 (at this level I will fix 50% for my BTC longs), but it won’t prevent of reaching the last IP4 goal at 61.8 %. Thus, not only the fundamental but also the technical outlook indicates further growth of BTC.

Despite the high volatility and increased risk of cryptocurrency trading, it can appear to be an excellent investment tool within the portfolio with a 2-4% share. Especially considering that the cryptocurrency & blockchain industry is developing by leaps and bounds and won’t disappear in the coming decades.

About the Author

Viktor Pershikov, MFTA is the Chief strategist at 8848 Invest, a specialist in the cryptocurrencies field and technical analysis, with 12 years of experience on financial markets and holder of the IFTA-diploma
Master of financial technical analysis (MFTA).

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