Bitcoin, after climbing steadily since early September, has suddenly leaped higher—jumping toward its all-time highs of around $20,000 per bitcoin set in late 2017.
The bitcoin price is up around 10% over the last three days, soaring toward $18,000 even as the recent equity market rally stalls.
However, some have warned a bitcoin price correction might be just around the corner—with one bitcoin price analytics company predicting bitcoin could soon fall back to just $14,000.
“Bitcoin is performing better than expected,” said Ian Balina, the chief executive of Washington-based Token Metrics, which uses technical analysis of historical price data to make forecasts about the future price of bitcoin and other cryptocurrencies, speaking over the phone.
“While still bullish long-term due to macro-economic factors and large corporations getting into crypto, we expect bitcoin could correct back to around $14,000 by the first week of December.”
Bitcoin, after starting the year at around $7,000, has more than doubled in value so far this year, pushed on by renewed interest from Wall Street and support from big-name investors who see bitcoin as an emerging hedge against a wave of inflation that could be on the horizon.
“The bitcoin price is being driven by demand for a safe haven asset,” Phillip Gradwell, chief economist at bitcoin and crypto data company Chainalysis, said via email, adding he believes a “positive feedback loop has started” that will push the bitcoin price higher.
“This has been building from mid-March. Since then, over 1 million bitcoin have been bought by investors, mostly from Western exchanges. This growth in demand is meeting a shrinking supply, as fewer and fewer bitcoin holders are willing to sell, with the supply of bitcoin liquid and available to buy as low as it was in mid-2017, before the previous bull run.”
Last month, the bitcoin and cryptocurrency market was set alight first by the news that payments giant PayPal
The two developments turbocharged the already stimulus-inflated bitcoin and crypto market, with many long-suffering bitcoin supporters predicting the latest rally has a long way to run.
“Belief is growing that we could reach $20,000 before the end of the year,” Micah Erstling, trader at Hong Kong-based bitcoin and crypto market-maker GSR, said via email. “More importantly, investors believe that this rally is sustainable. Many signs point towards that.”
The last time bitcoin was at these levels was December 2017, the peak of a year-long rally that collapsed through 2018. This time around, without the bitcoin mania that was sweeping the world in late 2017 pushing up the price, traders are feeling more secure.
“We are currently witnessing extremely bullish price action in bitcoin,” Nicholas Pelecanos, head of trading at blockchain development platform NEM, said via email. “Driven by a mix of market structure and strong fundamentals, bitcoin could now be within days of reaching it’s all-time high.”
Beyond 2020, bitcoin and cryptocurrency investors are almost universally bullish—with many expecting bitcoin to to climb far higher than ever before.
“Bitcoin could hit $45,000 within the next couple of years,” Balina said, pointing to the development of central bank digital currencies as something that he thinks could push up the bitcoin price over the long term.
“A fully-fledged digital dollar would be a marketing engine for bitcoin and crypto,” Balina said—something he expects to happen eventually but is still some years away. Earlier this year, the creation of a digital dollar to help distribute stimulus funds across the country was floated by U.S. lawmakers but didn’t make it to the final draft.
Elsewhere, China has begun the roll out of its digital yuan and the European Central Bank has signaled its intention to begin work on a digital euro.