Bitcoin’s wild ride in 2020 – where will it end up?

25 Sep, 2020
Bitcoin’s wild ride in 2020 – where will it end up?

Take a breath. It’s easy to get caught up in the day-to-day talk about where the price of Bitcoin (BTC) will go. There is no shortage of analysts, traders and pundits who light up crypto social media boards as they track the “signs” that BTC will go up or down. Hope rises and falls as the price, trading volume, coin sentiment and other key metrics are watched and analyzed hour by hour and sometimes minute by minute.

So what should you watch for as the crypto market enters the final quarter of the year? Will BTC end the year on a high note and maintain its price over $10,000? Or even $11,000?

It’s certainly been a good year for the world’s first digital currency. BTC started the new year at $7,063 and steadily climbed until March 15, when the U.S. stock market’s Dow Jones Industrial Average dropped more than 3,000 points. Bitcoin fell along with it to a low of $4,907.  But after weathering that market uncertainty, the coin began its steady climb, briefly reaching $12,168 on August 16. Since then, the daily price of BTC continues to hover in the $10,000+ range, settling at $10,682 on Thursday as speculation of a continued bull market continues.

What’s driving the price of Bitcoin and what should you watch for in the coming weeks? For those who can’t spend every waking minute following BTC, here are a few other ways to keep your eye on the digital currency ball.

Following traditional financial stock markets is a good place to start. As we saw in March, BTC’s price often moves when the traditional stock market undergoes major shifts, as it did this week. The U.S. market took a dive on Wednesday and BTC dropped as well.  “Throughout 2020, we have consistently seen a strong correlation between crypto markets and traditional financial markets, and the crypto market's response to the 2.2% drop in Dow Jones futures this morning has reaffirmed this correlation,” according to Glassnode’s newsletter.

Bloomberg-Intelligence Senior Commodity Strategist Mike McGlone agrees. “Crypto movements typically have little effect on equity prices, but  if the stock market rolls over, it encourages more stimulus – Bitcoin support,” he said in a recent tweet.

Hash rate and new addresses are also core indicators, according to Mike McGlone. “The Bitcoin hash rate continues to increase and recently reached new highs. Also advancing are addresses used. A top metric for adoption, the 30-day average of Bitcoin addresses is equivalent to the price closer to $15,000 when measured on an autoscale basis since 2017,” he said in a article.

“Top Buyer” activity is another metric that is also tracked by traders.  Whalemap, tracks top buyers and HODLer (those who hold coins)  activity. “From my personal experience looking at this metric, next day after top buyers move, we go up,” Whalemap tweeted.

A Glassnode expert also pointed to HODLers as a major factor in BTC’s price in a Cointelegraph interview. “According to Rafael Schultze-Kraft, the chief technical officer at Glassnode, various HODLing data shows a rise in investor confidence,” the article said. “To start with, Bitcoin’s supply that has not moved for over a year has hit an all-time high, standing at 61%. It demonstrates the lack of appetite to sell BTC at the current price level.

“The relationship between the price of gold and BTC is also often closely watched by traders as both are seen to be alternatives investors reach for when the U.S. Dollar weakens.  The correlation between BTC and gold reached a record high this month. “The strengthening of the positive correlation appears to validate the popular narrative that bitcoin is a store of value and a haven asset,” Coindesk reported.

As the fourth quarter is about to begin, the conversation around Bitcoin is sure to grow as the crypto community watches and waits for BTC to settle on a its 2020 value.  Whichever metrics you choose to follow, there’s a wealth of information out there for you to track, ponder, and even obsess over if you choose.  Where will it end up?  When all is said and done, only the collective market can tell.

Joyce Pavia Hanson