Bitcoin remains the most profitable asset of the decade. Is there a possibility of reaching $20k?

Bitcoin has definitely come a long way over the years. The crypto powerhouse was barely worth a dollar in 2009. Now, its price has risen by 26,600,000%. Now standing at $13,266 at the time of writing this article, bitcoin’s dominance in the world of digital assets could only be the beginning.

It hasn’t been all fireworks when it comes to the story of bitcoin’s growth. The cryptocurrency has suffered great price drops that had a lot of people avoiding it. In December of 2017, the currency reached an all-time high of $20,000, but in months following the record-breaking price surge, the currency fell by more than 80%. 

A lot of reasons have been attributed to the massive drop. According to a research, half of the hike in 2017 was market manipulation. As opposed to the general belief that the 2017 surge was borne out of investor fervor, the research stated that another coin called Tether, was used to influence market price.

 Texas university finance professor, John Griffin, alongside a graduate student, studied millions of transactions on the bitcoin blockchain. With over 10 years worth of experience in tracking financial fraud, the author of the 66-page research paper pointed out that a cryptocurrency purportedly pegged to the dollar, known as Tether, was used to stabilize and manipulate bitcoin prices. The currency was used to buy bitcoins wherever a drop in price was imminent.  

The great fall has, however, not deterred the growth and popularity of bitcoin in recent times. A survey by Grayscale Investments has revealed that 55% of investors in the US would rather invest in bitcoin. In sub-saharan Africa, weekly trade volumes of the currency tops at $95 million. The acceptance and popularity of bitcoin is clearly not in question. 

However, bitcoin’s record performance throughout the decade, has not gotten it to $20,000. The currency has been showing much resilience since it got to $13,000 a few days ago. A drop below $13,000 on the 28th, and a quick recovery to $13,150 not so long after, are major signs that a downtrend is  unlikely. 

Bitcoin could reach $20,ooo by March 2021. According to analysts, this will be possible if the rate at which new coins are created is slowed down. The Bitcoin blockchain already has a trend of halving the amount of mined coins every four years. A decrease in the number of coins created, will lead to a decrease in the circulating supply. The halving of 2016 led to an all-time high of $20,000 in 2017 (not the only reason for the hike). Another halving this year, could lead to a significant rise by 2021.

While there are possibilities of seeing another price surge next year, the possibilities of a downtrend isn’t totally out of the picture. FOMO (fear of missing out) levels and the U.S. Dollar Index (USDX) raises concerns. The recovery of the USDX could have a negative impact on bitcoin since it is priced against the dollar as an alternative store of value. 

The level of excitement about bitcoin is also on the rise, increasing the FOMO (fear of missing out) levels. Research by Santiment has shown that posts about bitcoin are largely positive, investors and traders are constantly having something positive to post about bitcoin, which is indicating higher than normal FOMO levels. 

When FOMO levels rise, it leads to a sudden hike in price that could make whales (people with high volumes of bitcoins) consider selling. This, in turn, increases the amount of bitcoin in circulating supply, thereby, causing a sharp fall in price.

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