Only half a month later in 2021, Bitcoin will have a surprise and frightening drama.
At the end of 2020, Bitcoin exceeded $28,000 as one might expect. What people did not expect was that Bitcoin's price increase did not stop, but continued to break through one milestone after another, and finally broke through a record high of $41,910 in one fell swoop, which is only a "stop kick" from $42,000. It took only 8 days to reach this record high.
There are surprises and surprises. When people imagine that Bitcoin can continue to perform miracles, after Bitcoin fell below $40,000 in the early morning of January 9th, the price of Bitcoin fell again by more than 12% in the early morning of January 11. The lowest is $33,447, which is equivalent to a sharp drop of nearly $6,000 in one day.
In the following days, the price of Bitcoin slowly recovered, and it broke through $40,000 again on January 15. The current Bitcoin price fluctuates at around 37,000 USD.
The volatility of Bitcoin prices at high levels has further intensified, leaving many people confused. Those who already hold Bitcoin are considering whether to sell or continue to hold it. And those who are now preparing to join the Bitcoin feast, think it’s too late?
Although the world's first and largest cryptocurrency is at the highest level in history, do investors still have the opportunity to join the ranks of cryptocurrencies?
Let's review the several plunges in the history of Bitcoin and its performance in 2020. Perhaps this will give you a more comprehensive understanding of Bitcoin and a clearer judgment on the future trend of Bitcoin.
01
Three flash crashes in Bitcoin history
Bitcoin was born when the world economy was turbulent. The price is less than 1 cent, and 1 U.S. dollar can be exchanged for 1,300 Bitcoins, which has only risen by a few cents in a year.
On February 10, 2011, the intense interest of investors pushed the price of Bitcoin to 1 U.S. dollar, and that day was therefore called the "U.S. Dollar Parity Day." After that, Bitcoin began to fluctuate.
Bitcoin's first plunge occurred in 2013. At the end of November of that year, it broke through $1,000, reaching a maximum of $1127.45. However, the good times did not last long. By mid-December, the price of Bitcoin plummeted by nearly 50%. The most notable feature of this round of bubbles is that the decline was relatively flat but lasted for a long time: in the following year, the price of Bitcoin fell to $172.15, and this stalemate remained for several years.
After four years, Bitcoin plunged for the second time. On December 7, 2017, the price of Bitcoin reached US$20052, a record high at the time. After that, it fell sharply. As of December 15, 2018, the unit price of Bitcoin was only US$3,194, the lowest in a year. The overall market value was US$56.6 billion, which was a loss of US$269.9 billion compared with the highest market value of US$326.5 billion in 2017.
Bitcoin's third plunge occurred in mid-March 2020.
02
Soaring after the 2020 plunge
After experiencing the bear market in 2018, Bitcoin slowly emerged in 2019. On January 1, 2020, the price of Bitcoin reached $7,238. Subsequently, Bitcoin ushered in a new round of rising from early January to mid-February, reaching nearly 10,300 US dollars. However, just as the BTC approached this level, the bullish wave subsided and a correction occurred.
Bitcoin's decline was stopped by a support point of $8,500, and just as another round of surge was about to begin, fears about Covid-19 forced the entire crypto industry to collapse.
This crash is believed to be caused by the correlation between the crypto industry and the stock market, which only plummeted a few days before the digital currency crash. But unlike the stock market, the recovery of encryption technology began when the cryptocurrency bottomed out.
BTC recovered to its pre-crash level in about a month and a half, in early May. Throughout the first half of the summer, the coin has been trading sideways, fluctuating between US$9,200 and US$9,500. This situation changed in late July, when BTC finally broke through the resistance level of $9,500 and soared all the way to $12,000.
This level kept it low until the beginning of September when the price of gold fell again, this time reaching the $10,000 support level. About a month later, Bitcoin began to soar, soaring to around $19,000, reaching the long-awaited $20,000 mark in mid-December.
BTC has been setting new records every other day for the past two weeks, and finally reached a record high of $24,209.66 on December 20, 2020, which happened to be the day before the third anniversary of the last historic $20,000 mark. . The first time was in 2017.
03
What caused the market in 2020
Unlike other markets, in other markets, the reason for the rebound is often easy to find in the fundamentals, but the situation with cryptocurrencies is different. Although it is sometimes easy to find the cause of a bull market trend, the market's rise is often independent of existing information.
However, there is a trend beginning in 2020 that may be the reason for all this-institutional involvement. There is usually a positive correlation between mainstream Bitcoin inclusion and price increases.
In 2020, Bitcoin has also achieved success in addition to the price increase. Bitcoin has always attracted the attention of institutional investors. Companies like Grayscale and Microstrategy have reported an increase in demand for Bitcoin, and they have purchased large amounts of Bitcoin on behalf of their clients.
Many predictions indicate that the scarcity caused by this interest may be one of the important factors that caused Bitcoin's price surge in early 2021.
It is worth mentioning that this year is the third Bitcoin halving, resulting in a halving of its block reward. The halving occurred on May 11. Prior to this, the block reward was 12.5 BTC per block. Now the reward is only $6.25.
This also makes many people believe that the price of BTC will rise, just like the result after the previous halving. Of course, there are some people who deny this theory, such as Vitalik Butlin of Ethereum. Batlin pointed out that there is no evidence that the halving will cause prices to soar, except that the major price increase in history occurred approximately 18 months after the halving.
This time, Bitcoin's price spike seems to have come earlier, which may be the result of increased demand, because Bitcoin is now more widely known than when the price was halved last time.
PayPal, the world’s largest online payment service, recently announced a major development that could cause the price of Bitcoin to soar. PayPal revealed that it plans to add support for cryptocurrencies in its platform. Bitcoin and some other currencies were the first to be listed.
PayPal has allowed U.S. citizens to start using cryptocurrency on its platform, and it is expected that the same function will be used elsewhere in the world in 2021. Given the coverage and credibility of PayPal, this is a huge move for Bitcoin. At the very least, the company's decision has raised people's awareness of Bitcoin, which has made more people interested in Bitcoin, and may even make some skeptics change their minds.
Of course, during the Covid-19 crisis, Bitcoin performed better than any other asset. This is after all its purpose-to provide an alternative when all other assets fail.
The result of all this is that Bitcoin has set its own new record. This is impressive for any cryptocurrency. However, when Bitcoin does this, it is simply a game changer.
04
What will happen to Bitcoin in 2021
Through the above review, we are not difficult to find. On the one hand, Bitcoin has experienced rollercoaster-like bumps, and after reaching incredible heights, it quickly fell to terrible lows.
On the other hand, no one knows when it will reach its peak. Most other financial assets have decades of history and charts that can be analyzed, while Bitcoin is relatively new and has less history in its charts. Is $40,000 a peak? Is it $50,000? In a recent research report by JPMorgan Chase, analysts believe that in the long run Bitcoin may reach $146,000, but to reach this price, Bitcoin The volatility must be greatly reduced.
In any case, it is certain. There is great demand for Bitcoin price forecasts for 2021. It is expected that 2021 will be a truly prosperous and impressive year for Bitcoin.
By the end of the first quarter of 2021, it is not impossible for the price to reach $50,000. If this is the case, I expect BTC will grow further, reaching $80,000 by the end of the second quarter (June 30, 2021). Historically, summer is a period of slower price fluctuations in the year, so there may not be so many actions in the third quarter.
If this positive trend continues in the fourth quarter, a price level of $90,000 is not impossible.
When predicting the price trend of tokens, the inventory-flow model is very accurate. At the basic level, the scarcity of Bitcoin is highly correlated with the value of the network, especially after its production speed has declined.
Finally, there is also increasing demand from institutional investors seeking to hedge against inflation, which may cause prices to double within a few months of achieving this recent milestone.
This is a question that anyone in the world wants to know the answer to. The simple fact is-no one knows. While some people have always believed that Bitcoin will reach six figures in our lifetime, others believe that it will once again succumb to its highly volatile nature and collapse. Judging from the history of the world's first cryptocurrency, either party may be right, or both parties may be right, because Bitcoin may maintain its record-breaking cycle.
If the history of the financial market, especially the history of Bitcoin, has taught us anything, it is that the bull market can last for a long time and can also collapse instantly. What do you think will happen?
As for buying? Is it for sale? Or continue to hold? It all depends on how confident you are in the future of Bitcoin. Today, Bitcoin has escaped the vicious circle of doubt, and changes in the external environment will give you more basis for judgment.
Finally, I also remind everyone that Bitcoin's speculative nature makes it inevitably high-risk, and its future needs to meet various tests.