This is a very important question and it is always good to have some ideas as to what the price trajectory for Bitcoin will be heading down towards this halving event, and thereafter for the rest of 2020.
Bitcoin had a very interesting 2019. That year’s price moves can best be described as a roller coaster because the present price levels that have been attained by the BTCUSD pair (i.e. from $9500 to $10,500) were resistance areas that were tested at least four times in 2019, but all tests failed to break this price range to the upside. This resulted in price dropping to as low as $6,800, where BTCUSD eventually found support.
Bitcoin started off this year on a bullish note. However, the fundamentals responsible for this move did not come from BTCUSD itself, but from other external factors. Let us look at what these factors are and how they will play a role in the price outlook for Bitcoin in 2020.
The unheralded Istanbul hardfork is doing some great things within the Bitcoin blockchain itself. A recent report by Coin Metrics, a company that provides analytics of individual blockchain networks and the crypto market, indicates a strong improvement in some of the Bitcoin network metrics.
- Ether’s realized cap climbed 3.6% last week.
- Mining difficulty is up by 3.6%
- The hash rate jumped 3.7%
- The Ether network is attaining better supply distribution, spreading out Ether hitherto trapped in ICO crowdsales into the hands of new owners. ICO addresses which once held up to 60% of all circulating Ether in 2016, now hold only 40%.
As indicated by crypto economist Alex Kruger, there is evidence that an entity has been mopping up a lot of Ether tokens, with the trading volume for ETHUSD rising nearly 4 times in the last week than was witnessed in the entire second half of 2019.
So we can say that things are looking up on the fundamental side of the equation. There is some fundamental basis for the recent uptick in prices. But what do the charts say?
Bitcoin Price Outlook for 2020
Many self-professed gurus have come out to project some astounding prices for Bitcoin in 2020. Now that BTCUSD has hit a road block at $10,500, many of them have started to walk back on their comments. A few have stuck to their guns. But what do we advocate here? We follow what the charts say.
The year 2020 is still very young: only two months old. However, we shall attempt to provide our Bitcoin price projection for 2020 using quarterly projections and not monthly projections. Any price projections made here are not set in gold and they are definitely not a definitive recommendation to buy or sell Bitcoin or any crypto-asset for that matter.
So what do the charts say?
Forget any of the rallies in price which have just occurred. The long-term chart shows clearly that Bitcoin still remains in a downtrend. All that has been happening is rallies within a downtrend, and that explains why sellers re-enter after the deceived traders who know nothing about the Dow theory of price action rush in with their buy orders.
What happens? Bitcoin price rallies to some extent, and then a relentless selloff begins as the informed traders who were waiting all along for the right moment, go in and initiate a hard selloff that burns fingers all the way down. According to popular TradingBeast’s Bitcoin Predictions this downtrend of Bitcoin should further deepen in 2020 and the bitcoin price should on average hover around the 8 000 dollar mark.
See, when the so-called “gurus” come out to say that Bitcoin will hit $100,000 or $250,000 a coin, they are not stupid. Some of them deliberately sell this narrative through recognized media houses, who of course will render the stories and interviews for the ratings.
But what uninformed investors may not realize is that some of these “gurus” actually have shorts hanging around at just the right levels. Once the goon traders buy the “predictions” that these guys are selling, all they end up doing is driving rallies within the downtrend, making Bitcoin cheap for the professionals to sell once price hits the relevant points.
We have seen it happen all over again this week. Take a look at the weekly chart below, and you can see that the recent price levels that got all the gurus touting a 6-figure price spike had actually been tested before in 2019. All three tests of those levels failed.
BTC/USD Weekly Chart Showing Previous Failed Attempts to Break Above 10,500
BitMEX exchange reported that over $150 million worth of long positions on its exchange were liquidated in the latest price crash of February 26, 2020; the largest for 2020. Hardly surprising: too many people got sucked in again.
Now let’s look at the daily chart for Bitcoin below. We can see that the magical $10,500 price level had actually been tested last year and it was not broken. In fact, price fell all the way below $7000 from that rejection at that price. Moreover, the presence of the bearish engulfing pattern right at that point told smart traders what to do: it was time to start selling.
BTC/USD Daily Chart Showing Bearish Engulfing Sell Signal at the 10,500 Resistance
So what are the realistic Bitcoin price predictions for 2020?
The last time that BTCUSD tested the 10,500 level and failed to break it to the upside, we witnessed a calamitous drop that took the pair to 6,500. This was in Nov/Dec 2019. If we base our Bitcoin price predictions for the rest of the first quarter of 2020, it may be safe to say that history may repeat itself. It is hard to see Bitcoin trading above 9,500, but again, it is hard to see BTCUSD fall all the way to 6500.
A careful look at the daily chart for BTCUSD will show that the asset is actually trading within the corrective phase of the Elliot wave pattern.
BTC/USD Daily Chart and Elliot Wave Pattern
The question is, is the c-wave correction over, especially with price now at a 50% retracement from the swing low that marks the start of impulse wave 1, to the swing high marked by the peak of wave 5/start of corrective wave a?
It is likely that BTCUSD may make another push to the upside, but it is hard to see it trading above 9,900 or below 8000 (61.8% Fibo retracement shown above). So the Q1 2020 target should be between 8,000 and 9,900.
Q2 and Q3 2020
Q2 2020 brings along the Bitcoin halving event. There is still a lot of division among experts as to how this halving event will affect the price of Bitcoin. 85% of minable Bitcoin has already been mined, and a large chunk of this is either in wallets with missing private keys (and therefore lost forever), in stolen caches which are getting harder to get rid off or in the hands of law enforcement agencies.
The Finnish government was revealed to have close to 6,600 BTC it seized in drug busts, and unlike the US authorities who typically auction theirs after some time, the Finnish authorities do not plan to sell theirs anytime soon.
What this means is that no one actually knows how much Bitcoin is freely circulating. Now we may be wrong, but we do not really believe that the Bitcoin halving event will have long-term price effects on the BTCUSD. Short term, it may lead to a lot of demand buying just before the event, but we think this will be replaced by coin offloads once people realize that this is not going to be apocalyptic event.
So we have the possibility of BTCUSD actually testing the 10,500 or even 11,000 price levels in April/May 2020. But after then, we expect a selloff that would take prices back to the 8,000 to 9,900 mark by June.
Q3 and Q4 2020
Election season in the US could trigger some changes in the cryptocurrency markets in terms of policy. This may be the period when institutional trading in BTC starts to get some serious attention. Institutional involvement could see a bull run on BTCUSD that may allow it to start approaching its 2017 highs.
Only then can we truly start to think of BTC turning a corner. However, institutional involvement will bring less volatility on BTC, and so any price increase in BTC will be much slower than we are seeing at the moment.
We expect to see BTCUSD trading anywhere from 10,000 to 13,000 at this time, but only if the institutional players get involved. If this is not the case, then we may have to deal with range-bound prices that spill on from Q3 to Q4 2020. $8,800 to $11,000 may be a reasonable price range, but a shock drop to $7000 and back up again cannot be ruled out.
Anything can happen on the fundamental front and if this is the case, any price predictions can be totally upset by such events, rendering these null and void.