Despite the lack of decisiveness in the bitcoin market following the dominant crypto asset’s abrupt drop from $14,000 to $9,500, many analysts - even bearish ones - generally remain confident that the bitcoin price is heading towards a new record high in 2020.
On CNBC’s Squawk Box, as CCN reported, prominent news anchor Joe Kernen emphasized the imminence of the next halving of the Bitcoin blockchain protocol, suggesting that it could act as a major catalyst for the asset over the medium to long term.
In recent years, the bitcoin price has been primarily driven by supply and demand from the market. As the market capitalization of the asset grew, the impact of news and events have started to lessen.
The block reward halving of bitcoin, which occurs approximately every four years, is expected to have a fundamental effect on the circulating supply of bitcoin, altering the rate at which new BTC are mined.
On the Bitcoin blockchain protocol, users mine BTC to secure transactions and process payments using mining equipment and electricity. In return for the consumption of resources, miners are rewarded with BTC, which then is sold, primarily through over-the-counter (OTC) markets.
During or around May 2020, the amount of BTC miners receive for processing transactions on the Bitcoin blockchain protocol will decline by half, leading to a decline in the inflow of BTC into the global market from miners.
“With what we produce of gold every year, it would take 62 years to produce that much gold. If you do the same kind of analysis using bitcoin or silver or anything, you can come up with some of these flow metrics that are highly correlated. Silver I think is 22 years and gold is... and in the next halving, bitcoin, all of the sudden, gets close up to where gold is.... we will see anyway."
Due to the block reward halving and other technical indicators, technical analysts who remain bearish on the short-term trend of bitcoin have stated that in the long-term, the trajectory of the dominant cryptocurrency is likely to be positive.
For now, some technical analysts foresee bitcoin continuing to consolidate until it finds strong support, possibly below $9,000.
One trader stated that the volume of BTC has been on the decline since June and there is interest in the market to acquire bitcoin in the $8,000 region.
“BTC has been falling on decreasing volume since the peak in late June. We needed to recharge our batteries before the next run up, and we have been. Everyone wants to buy $8,000s, and I'm sure not counting them out. I expect spot bids 8-8.8 to be rewarded."
"If we do see the 7's, that's where I start to build a longer-term leveraged position. Many people have a "this is exactly where we bottom out" target, I have a range. Below $7k and bull market structure is toast, pack it up, halving canceled.”
This week, Blockchain, the operator of the most widely utilized non-custodial cryptocurrency wallet, announced the launch of The Pit, a cryptocurrency exchange linked to the Blockchain wallet following one and a half years of development.
Blockchain CEO Peter Smith said:
“We assembled a stealth team and laid out our ambitions. Then we got to work. Today, nearly 100 talented people are working to launch The PIT, hailing from top firms like NYSE, TD Ameritrade, Google, Goldman Sachs, UBS, Interactive Brokers, and Revolut.”
The expansion of large companies in the cryptocurrency sector indicates the confidence of industry executives in the overall growth of the market.