Bitcoin fell below $8,000 again yesterday, trading at roughly $7,800. It was an ugly sight to see, but as analysts are learning right about now, the present resistance level is still at around $8,100 given that the currency has jumped back up to this position within the last 24 hours.
Bitcoin Is About to Get Bigger
The volatility that has been striking the coin over the past ten years – yes, it’s been vulnerable to price swings since it first emerged in the financial space – is far from over. The crypto bloodbath that occurred roughly two weeks ago is proof of that, but what we’re witnessing is that while volatility is still a prominent problem, bitcoin has learned how to consistently pick itself back up again. For example, rather than stay below $8,000 for several days like it did when it first encountered this drop, the currency hopped back up within a much shorter period.
One of the reasons for the sudden fall may be because bitcoin is preparing to shoot beyond what anybody thought possible in 2020, a year that’s right around the corner. A recent report published by Bayerische Landesbank in Germany suggests that everyone’s favorite cryptocurrency could wind up reaching the $90,000 mark by May of next year.
This is partly due to the halving that’s set to take place, an event that doesn’t happen all that often for bitcoin. What happens is that the rewards for bitcoin miners are literally cut in half, and thus the process of mining becomes a little more complicated and takes more time. The currency becomes “rarer” for lack of a better word, thereby causing present amounts to become pricier. It’s another example of bitcoin serving as “digital gold.”
The bank took what’s known as a “stock-to-flow approach” to reach the $90,000 figure it’s predicting. This approach ultimately measures the “hardness” of an asset; not it’s physical hardness (as bitcoin is digital), but rather how tough it becomes towards elements that might strike its price in a negative way.
2020 Will Be a Serious Turning Point
It is probably safe to assume that the bank believes bitcoin will show much stronger resistance to price swings. Interestingly, gold has a considerably high stock-to-flow ratio at 58, but the bank believes bitcoin will potentially overtake that in just the next few months alone.
Either way, 2020 is poised to be a big year for the currency considering eccentric software expert and millionaire John McAfee is going further than the bank’s initial prediction and claiming that the currency could spike as high as $1 million per unit. No doubt the presidential election of that year will also have a major impact on the currency just like it did in 2016 (the currency spiked ferociously following the election of Donald Trump that November).