Your knowledge of the world of cryptocurrency, and the timing of if/when you invested in bitcoin, will dictate whether you consider BTC to be the powerhouse of the crypto world that keeps everything afloat, or a sitting duck just waiting to be taken out by Ethereum or another ambitious altcoin.
For the uninitiated, the origins of bitcoin date back to 2009 – and blockchain technology goes back even further than that.
It all began with a white paper written under the pseudonymous name ‘Satoshi Nakamoto’, who nobody is really sure actually exists. That text was called ‘Bitcoin – A Peer to Peer Electronic Cash System’, and outlined the author’s vision of a currency that was decentralised, anonymous and facilitated rapid payments online.
In theory, at least, it was a paper that sparked a revolution.
The fruits of the early days of cryptography as defined in this sense was the currency bitcoin, which people were able to trade for as little as $0.30 back in 2011.
For context – and we don’t wish to make you choke on your breakfast – at its 2017 peak, each bitcoin was worth $20,000…
This means that if you purchased 100 BTC in 2011, your $30 investment would be worth a cool $2m just six years later.
Of course, there have been plenty of ups and downs in the interim period, with highs and lows, laughter and tears, and joy and despair for those who have been BTC holders and/or traders.
After the good times of 2017, when bitcoin and the altcoins all reached their all-time highs, so followed the bear market of 2018 when the bubble appeared to be well and truly popped.
2019 was all about recovery, with BTC starting the year valued at around $3,500 per coin and ending it – assuming that nothing monumental occurs in the last few weeks of December – at a price of approximately $7,600.
Indeed, that makes bitcoin the best-performing asset of 2019, with more than 100% growth dwarfing that of any instrument listed on the Nasdaq 100, the S&P 500 and any other exchange where highly cherished assets are listed.
The bottom line is that for all its volatility and uncertainty in the market, bitcoin continues to thrive and bounce back when the chips are down. This proves its legitimacy, and gives holders every reason to be positive heading into 2020 and beyond.
A good news story
Like most tradeable assets, crypto is a market that is driven partly by buyer/seller sentiment.
Good and bad news stories play their part in creating fear or building confidence, with buy-ins and sell-offs taking place seemingly on a whim – occasionally with no rhyme or reason. It’s why smart traders look to longer-term signals for their clues as to the strength of an instrument.
However, as far as people looking to make a quick buck, crypto is sent from the gods for the shorters and the flippers.
“The volatility of cryptocurrencies is what makes them excellent conduits of growth for traders, investors and growing businesses,” Daniele Mensi, the CEO of the digital exchange group NextHash, told the Independent.
“What is important to remember is that bitcoin is still up around 115% this year, so its short-term peaks and troughs are necessary to facilitate longer-term growth across the currency.”
China in the game?
One of the hottest potatoes that governs the sentiment towards the crypto market is that of regulation, particularly when rumours suggest that laws regarding currencies, trading and the industry as a whole are set to be relaxed or toughened in a key market.
China, for example, has been key in driving crypto values – without really meaning to.
For years now, there has been speculation that China was set to allow crypto trading, which has been banned in the country since 2017, and while that is yet to become apparent, it is a rumour that still impacts upon buying and selling motivation.
One thing we do know is that China is sweet on blockchain technology, and at some point, this will surely manifest itself as a positive for worldwide cryptography and bitcoin mining.
The Chinese president, Xi Jinping, has been quoted as saying that “we [China] must take the blockchain as an important breakthrough for independent innovation of core technologies.
“[We must] clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation.”
Whether Chinese crypto exchanges will ever see the light of day again remains to be seen, but traders and holders should be using Google to their advantage in keeping abreast of the latest developments – there is arguably no better determinant of bitcoin value than regulatory news from Asia.
’Tis the season to be jolly
Historically, the value of bitcoin has enjoyed a bit of a pump in the lead-up to Christmas and shortly afterwards, with something of a correction following in January.
The first trigger tends to be the Thanksgiving holiday weekend, when liquidity seems to flow into the market.
Indeed, in 2019, some 10% was added to the value of BTC over the holidays, which acted as a trigger for further growth in the run-up to the festive period.
The history books have shown that Christmas is a golden time for holders. In 2013, for example, BTC reached its then ATH at just over $1,000 in December, while four years later, the landmark bull run culminated in a peak of $20,000 – another all-time high.
Are people being gifted crypto wallets for Christmas? It seems highly unlikely, but there has been a storied history of bitcoin getting a pump over the festive period, and it could perhaps act as a springboard for better things to come in 2020.
There are clues and indicators that point to a phenomenal year ahead for bitcoin.
There is the halving event planned for May (more on that in a moment), which, if history teaches us anything, tends to precipitate a significant price surge.
There are also a couple of other pointers that suggest that BTC will soon flourish even further beyond its extraordinary 2019.
The first cab off the rank might well be the Lightning Network, an infrastructure that will ultimately speed up online bitcoin transfer – the main stumbling block preventing the currency from becoming a mainstream hit.
Initially, Bitcoin’s blockchain could only process seven transactions per second, which led to a queue and a waiting period for payments to be completed. For context, Visa can handle 24,000 transactions per second. In a modern world where convenience and speed are key, the failings of BTC were never going to cut the mustard.
These also came with a processing fee, which again is not exactly a turn-on for would-be crypto evangelists.
However, the Lightning Network will aim to rectify that by adding another layer on top of the blockchain, freeing up resources for transactions to be completed in a quicker timeframe. The age-old problem of actually paying for something with your BTC wallet quickly, such as a coffee or a Big Mac, could finally become a reality.
Tim Draper, the venture capitalist who has been a notable crypto investor, believes that the Lightning Network could be the catalyst for significant bitcoin price growth. “I think bitcoin payment processors are really going to open the floodgates,” he said at a crypto Q&A session.
“It’s because of Lightning Network and OpenNode and maybe others that are allowing us to spend bitcoin very freely and quickly, so that it’s not just a store of value but it can be used for micro-payments.”
The adoption of bitcoin and crypto as a whole in retail environments is one of the walls that tech experts need to break down. If the average Joe or Jane can spend their BTC in their local shops and online as quickly as they can with credit/debit cards and e-wallets, then you can expect an avalanche of investors desperate to bulk out their wallets – flooding the market with money and causing the price to rocket.
Pie in the sky?
One of the things that has dogged bitcoin and its legitimacy are those so-called experts making wild claims about BTC one day being worth $1m per coin, or something equally ridiculous, simply because they want to build positivity and see the value of their own stash increase.
Thankfully, most traders, investors and anyone with a passing interest in crypto can see through such tomfoolery.
However, when noted observers apply genuine technical analysis and come out with lofty claims, we can start to take them more seriously.
One such individual is PlanB, a market analyst who has been involved in crypto since long before the 2017 gold rush. He’s not somebody ‘holding bags’ of bitcoin looking to get rid of them – he has been in it for the long haul from the start.
PlanB has recently come out with his own observation that bitcoin’s value could peak at $100,000 by the end of 2021.
To come to that ambitious conclusion, he produced a report utilising stock-to-flow ratio, which is a tool used to calculate the price of an instrument based upon how much of that asset is in circulation.
As we know, scarcity is key in determining how much an asset is worth – the lower the supply, the greater the demand and thus the greater the value.
When an instrument has a lower circulation, its value tends to increase.
Again, we’ll come to the bitcoin halving in a moment, but right now BTC has a stock-to-flow ratio of 25, and this will increase to 50 after the halving event.
For context, gold boasts the highest stock-to-flow ratio on Earth at 62. That number, 62, relates to the fact that it would take 62 years of production to get to the current gold stock level.
In essence, the higher the stock-to-flow ratio, the more valuable the asset.
Bitcoin halving: what is it and what will it mean?
As already discussed in this article, a relative scarcity of supply of an asset is a good thing if you are happy to see its value rise.
The bitcoin halving, scheduled for May 2020, should in theory produce the results that most holders are looking for.
What is the ‘halvening’? In short, the reward for mining new blocks is halved, so people who have made some income from mining in the past will now receive 50% less in BTC as their reward for verifying transactions.
The obvious upshot of this will be that the number of new bitcoins being generated by the network will be a lot lower – hence that scarcity of supply.
These halvings take place with every 210,000 blocks that are verified, which has ensured a fairly consistent event occurring roughly once every four years – and will continue to do so until the maximum supply of 21m BTC has been reached.
The side effect of the halving event will take place in the market, where we can expect to see the usual pattern: lots of buying activity in the lead-up to the halving, more buying during it as casual traders ‘FOMO’ in, and then a big sell-off when the value reaches what people assume to be its peak.
However, what has been noted is that the great sell-off does not produce the kind of percentage losses previously experienced when liquidity in the market was so low.
If you are wondering what to do before, during or after the halving, then our advice is to buy soon and hold throughout – you will come out the other side hopefully with a more valuable wallet of coins at your disposal.
By way of whetting your appetite, let’s take a look at what happened during the last halving events:
· The first halving took place
· The price of BTC rose from $11 before to $12 afterwards
· This doesn’t sound a lot, but it’s a near 10% increase
· By November 2013, a single bitcoin was worth $1,038
· The second halving event took place
· The value of BTC rose from $576 in June to $650 in July
· By July 2017, a bitcoin was worth $2,526
It isn’t guaranteed that the value of bitcoin will rise, of course, during this third halving – it is very difficult to predict this most volatile of markets! Past performance does not predict future results, and so on.
However, the history books so far show a clear trend for traders to follow: an immediate price surge of around 10%, followed by a more significant upturn in the year that follows.
Why is bitcoin’s growth so good for ETH, LTC, TRX and co?
When the top dog barks, the rest of the pack follow.
When it comes to cryptocurrency, the whole world seems to revolve around bitcoin, which remains the original coin and still the largest as far as market cap is concerned.
It’s also the ‘gateway’ crypto for most newbie traders, who opt to invest in the most recognisable name prior to perhaps exploring Ethereum and the other alternatives available.
You can look at any market – automobiles, online retail, travel – the results are essentially the same. The biggest brands continue to thrive and grow, while smaller operators find it extremely difficult to make any ground.
Jeff Dorman, the chief investment officer at asset management firm Arca, told Forbes that “BTC is still the most important asset in all of crypto.
“When it performs well, the best risk/reward is arguably to own Bitcoin over any other digital asset.
“This doesn’t necessarily mean BTC’s returns will be higher, just that the probability weighted return is the highest given that BTC is so far ahead of any other digital asset in terms of adoption and use cases.”
Bitcoin’s performance has wider implications for other coins. Its value tends to have a similar knock-on effect to ETH, LTC, TRX and the rest: if BTC’s value increases, so too do the altcoins – generally speaking.
Alternatively, when bitcoin is struggling, it can have the effect of dragging other currencies down with it.
Take August 2019, for example. In the space of a fortnight, bitcoin’s value dropped from $12,176 to $9,782. The result for the altcoins? A similar percentage drop for themselves.
On the flipside, at the tail-end of October, there was a pump from $7,499 to $9,300 in just 72 hours – again, the altcoins were pulled along for the ride with a rally of their own, with ETH, LTC, XRP and TRX all gaining 7-23%.
So, positive market sentiment towards bitcoin is great news for the whole market, and if you are a holder of one of the principle altcoins, then you should be cheering on BTC – it can only serve to improve the value of your collection!
What should you do now?
The decision you take on whether to hold your bitcoin wallet, sell it or use it to fund a purchase elsewhere will depend upon your personal circumstances – we’re not able to tell you what to do.
However, looking at all of the signs that we have outlined in this article, you can probably see that the future does look set to be positive for BTC and, as a consequence of this, altcoins.
If you hold your bitcoin for the next 18 months or so, you may well find that your asset has appreciated in value markedly – thanks to the halving, the Lightning Network and other market factors.
Of course, crypto is a particularly volatile market, so nobody can say for definite that this is what will happen.
At this point in time, selling might not be the wisest idea. At the time of writing, BTC is at roughly a third of its all-time high – indeed, it’s a couple of thousand dollars down on its yearly high – so there is plenty of ground to be made up. Given the positivity explained, you would hope that 2020 is going to be a very positive year for cryptocurrency.
Should I spend my bitcoin?
You might have asked yourself this question on numerous occasions and up until now not been able to come up with a concrete answer based on the factors presented to you.
If you have some bitcoin in your crypto wallet and you decide that now is the time to take the plunge, you will note that there aren’t a huge amount of big-name retailers offering you options as far as paying for goods and services in BTC is concerned.
This is one of the reasons why many holders and game lovers tend to invest their holdings into a bitcoin casino.
Here at Bitcasino, we welcome you to deposit in BTC and a range of altcoins, including ETH, LTC and TRX. Of course, should you land yourself some tasty winnings, you can withdraw them back into your crypto wallet if you wish.
We offer a wide range of titles, from blackjack and roulette to poker and baccarat, as well as a collection of dozens of slot games offering outstanding jackpot prizes.
It is quick and easy to transfer funds into your Bitcasino account using your and our keys, so you don’t need to worry about waiting for an eternity to get started – we fund your account so that you can begin gaming immediately.
If you are new to casino gaming online, the good news is that we also give our players the opportunity to play in ‘demo mode’, so you don’t need to risk your crypto holding until you are completely comfortable and have found your favourite games to play.
With a selection of bonuses and promotions thrown in for good measure, there has never been a better time to invest your currencies into Bitcasino. Why not stop by our site today to get your bitcoin gaming career off the ground!?
Words: Sean McNulty