- “Bloomberg Crypto Outlook” says that the world’s largest cryptocurrency will approach $20,000 in 2020
- COVID-19, Institutional Buying and the rise of stablecoins all contribute to its maturation as an asset class
- Gold is poised to top Carter-era highs
“Something has to really go wrong for Bitcoin to not appreciate in value.” This is Bloomberg’s bold opening statement for the June 2020 Edition of “Bloomberg Crypto Outlook”, released Thursday. The publication expects the world’s first cryptocurrency to retest its all-time high of $20,000 and go as high as $28,000 in 2020.
Bloomberg Crypto Outlook looked at a combination of factors to declare that Bitcoin will appreciate in 2020 and maintain the current support at $10,000 in the short term.
The report suggests that Central Bank easing and the current COVID-19 pandemic are accelerating the maturity of Bitcoin when benchmarked against the stock market and crude oil. The March 2020 crash, Bloomberg suggested, provided a good base for higher prices. Based on its historical volatility readings, BTC is at its lowest vs. the Nasdaq.
Bitcoin’s price appreciation is also because On-Exchanges, like the Grayscale Bitcoin Trust (GBTC), is absorbing the majority of the current supply and removing it from the market. GBTC has absorbed 25% of all newly-mined Bitcoins in 2020 compared to 10% in 2019. It should be remembered that the latest Bitcoin halving reduced the block reward from 12.5 to 6.25 BTC. This greatly reduced the current and future supply of Bitcoin, which is then further squeezed by GBTC’s actions.
As for on-chain metrics, Bloomberg said the increasing number of active addresses on a 30-day average can serve as an indicator for price appreciation. Bitcoins, like every other cryptocurrency, is stored by its holders in wallets (which are actually “addresses” that only their owners can control in the blockchain). History suggests that when this metric breaches the previous 30-day high, price recovery soon follows. That was true in 2019 and Bloomberg suggested the next breaching will be the start of a new rally.
The publication sees strong support for Bitcoin at the $8,000 level, which is the resistance level in 2019.
Because of COVID-19, the world is prioritizing the shift from physical to digital cash. No one can just digitize any legal tender –- more specifically, the U.S. dollar. Many users chose the closest possible – Tether (USDT) – to get Bitcoin.
Tether represents 90% of the value of all stablecoins currently in circulation. The interest is evident in the data; stablecoin’s total value is $10 billion in 2020 vs. $4 billion in 2019 as demand for dollars continues to grow. Tether is pegged to the U.S. Dollar at a 1 = 1 ratio. It provides exposure to the dollar without actually owning USD. But currently, the main use of Tether is to buy Bitcoin. Bloomberg said Tether’s adoption will rise with the dollar and expects it to overtake Ethereum as the world’s second largest cryptocurrency.
Bitcoin’s strong companion in this upward trajectory is gold. “There is little to stop gold from extending its peak vs broad commodities from 40 years ago,” the report explained further. Bloomberg said gold will top “Carter-Era high” vs. commodities.