Bitcoin turns mainstream: Prices to hit $12K in 2020, volatility to decline - Bloomberg Intelligence
(Kitco News) As bitcoin becomes more mainstream, its price moves will be less volatile, with the 2020 range set between $6,000 and $12,000, according to Bloomberg Intelligence.
Volatility is a big part of bitcoin price rallies and selloffs, which has defined the cryptocurrency during the last few years. But, this volatility will continue to decelerate as bitcoin becomes more mainstream with the introduction of futures and other instruments, said Bloomberg Intelligence senior commodity strategist Mike McGlone.
"Bitcoin price volatility should continue to decline in 2020, with the transition from a bear to a bull market apparently over," wrote McGlone in his December update. "Increasing institutional interest and vehicles for exposure -- futures, options, Bakkt -- are part of the maturity process. Prices appear to be increasingly caged, with $6,000-$12,000 marking the majority of the range's bell curve."
For 2020, bitcoin’s solid support is at $6,500 and first resistance is at $10,000, McGlone pointed out.
Throughout 2019, the popular cryptocurrency built a solid footing and its next price move is tilted to the upside, noted McGlone.
"A primary factor supporting appreciation of the bitcoin price next year is its potential to end 2019 near a good support zone. The Dec. 3 price of about $7,300 is essentially the mean, median and mode this year," he wrote. "In 2020, we expect Bitcoin to migrate more toward 2019's high close of about $12,730, as opposed to revisiting the $3,360 low."
Bitcoin prices peaked near $20,000 back in December 2017, which was followed by a significant selloff and a bear market. This year's move above $6,500 signaled an end to that bear market, said McGlone.
"Bitcoin's most widely traded price is about $6,500 -- the peak of the bell curve -- since the consolidation period starting in June 2018. Sprinting above this level signaled an end to the bear market, and revisiting it portends an extended range-bound slog before a sustained bull market returns," the strategist said.’
‘Got a view on gold? Then you should on bitcoin’
The more mature bitcoin becomes the more it resembles the crypto market’s version of gold, especially considering that bitcoin’s supply is limited to 21 million, which means that only about 17% more will be created, said McGlone.
“Increasing adoption of Bitcoin, the digital quasi-currency with limited supply, tilts our price outlook on the first-born crypto favorably for 2020 and the next decade. This year was part of its transition toward the crypto-market version of gold. The maturation process should continue, notably as volatility declines.”
Bitcoin is winning the crypto race of mass-adoption — a sign that prices will head higher, noted McGlone.
“Plenty can go wrong with a nascent asset, but unless the basic premises reverse -- mass adoption and fixed supply -- there's a higher probability to sustain price appreciation vs. depreciation,’ he said.
Going forward, bitcoin’s price moves should resemble that of gold, added the strategist. “Got a view on gold? Then you should on bitcoin,” McGlone wrote.
“Bitcoin trading will more closely mimic gold's… Both quasicurrencies are retracing bear markets and got a bit ahead of themselves in 2019,” he said. “Escalating trade tension, slowing Chinese economic growth, unrest in Hong Kong and the depreciating yuan are incentives for currency diversification.”