Bitcoin (BTC) Was one of 2019’s Best-Performing Asset, Will It Thrive In 2020?

After the devastating cryptocurrency bear market of 2018, Bitcoin was a fledgling project entering into 2019. However, a fantastic rally saw Bitcoin more than double its prices by the end of the year. This rebound was a massive relief for Bitcoin holders and very rewarding for those who invested when the market bottomed out

Bitcoin trading got a new lease of life, and the crypto scene is and more sophisticated than ever. Prices just about doubled, making Bitcoin the best performing asset of the year, outshining stock market indices, gold, and other commodities.

Early into 2020, the million-dollar question is how the pioneer coin will fair in the next few months. Bitcoin price predictions often try to take into account the various factors that shape prices to make possible projections.

Bitcoin’s as Digital Gold?

Bitcoin started the year at about $3,700 and closed it north of $7,500. This turnaround is a rise of nearly 100%. To get how momentous this was, tech stocks in the S&P 500, which had a record-breaking year, rose by about 34%.

For an invention less than a decade old, this resilience is incredible. Moreover, Bitcoin still operates for the most part without the institutional support fiat currencies, and even stable assets like gold enjoy. Therefore, Bitcoin relies almost exclusively on the confidence of network participants.

One fundamental trend analysts are keen on is whether Bitcoin will transition from a speculator’s favorite into a solid store of value asset. The speculation has made prominent traditional investors like Warren Buffet castigate Bitcoin.

Such speculation is a large part of the extreme volatility around cryptocurrency. With time, however, Bitcoin will get more stable. The rebound in Bitcoin indicates that it is more than just a fad. Instead, the network has millions of true believers who want the network to rise to its true potential.

That potential is Bitcoin as a stable store of value. No single entity has control over the Bitcoin supply, and the maximum supply is a fixed 21 million. The only assets with comparable qualities are precious metals like gold. Therefore, Bitcoin can become the equivalent of digital gold.

Factors That Will Influence Bitcoin’s Prices In 2020

Bitcoin’s fortunes in the near future do depend on some technical and regulatory developments.

Protocol enhancements through community improvement proposals (BIPs) are an essential part of Bitcoin. The ‘new SegWit version 1 output type’, for instance, will implement spending based on Taproot, Schnorr signatures, and Merkle branches. The community is busy at work, and these upgrades should make the network better.

· Merkelized Abstract Syntax Trees (MAST) aim to change how smart contracts get written to the blockchain. This upgrade can improve privacy, transaction size, and allowing larger smart contracts.

· Schnorr signatures– Schnorr signatures intend to replace Bitcoin’s current digital signature algorithm (ECDSA) for a more efficient one. Accordingly, the Bitcoin protocol can aggregate multiple transaction signatures into one.

· Bulletproofs– Another upgrade that should improve network privacy. This upgrade is still pending as the community has yet to find consensus ways to implement it.

· Sidechain projects-sidechain projects under developments include Liquid Network, RSK, and Drivechain.

· Lightning Network– the highly contentious network aims to provide a scaling solution to the Bitcoin network.

These upgrades are at different stages of implementation or consideration. They indicate the vibrant nature of the Bitcoin community, most of whom want to make the network better. Furthermore, Bitcoin block rewards will reduce by half, meaning that supply will become less with time. This scarcity is a deliberate construct of the network’s founder Satoshi Nakamoto.

The approval of Bitcoin Exchange Traded Funds (ETFs) is still a goal for several Bitcoin entrepreneurs. In 2020, any positive signal by the SEC can be enough to jolt markets up.

Regulations are still a significant bottleneck for Bitcoin growth. Institutional players like hedge funds are yet to dive into crypto because of the absence of a proper regulatory framework. Favorable regulations can provide vital clarity to this burgeoning industry. For instance, regulation on the transfer of Bitcoin-related funds through accredited institutions and stock markets can give a lot of investors the green light to invest in Bitcoin.

Optimism for A Bullish Run

In summary, the Bitcoin community is pretty upbeat right now. Yes, there will always be outliers like John McAfee, who predicted that Bitcoin would hit $1 million in 2020, which are overly optimistic or pessimistic about Bitcoin. The truth, for the short term, lies closer to the historical margins. With technical improvements soon and overall maturity getting better, this sentiment is justified.

On the technical side, Bitcoin’s block rewards halving in mid-2020 will improve its scarcity, making its case as a store of value asset more solid. Predicting Bitcoin prices is difficult, but should the technical improvements shore up, and the regulatory developments don’t hamper progress, Bitcoin could ease past its record highs of about $20,000 again.

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CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com

Torsten Hartmann

Torsten Hartmann

Torsten Hartmann has been an editor in the CaptainAltcoin team since August 2017. He holds a degree in politics and economics. He gained professional experience as a PR for a local political party before moving to journalism. Since 2017, he has pivoted his career towards blockchain technology, with principal interest in applications of blockchain technology in politics, business and society.

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