Two years ago, when the market value of bitcoin reached $ 20,000, cryptocurrencies were one of the most hyped topics. After a while, the cryptocurrency market began to decline, bitcoin dropped to $ 10,000, and then to $ 4,000, so people began to forget about cryptocurrencies, recalling them only to grumble on “the next Ponzi pyramids” and predict their complete death. But next year showed that critics got a little hasty.
Despite the expectations of skeptics, bitcoin survived, reached $ 13,000 in the next summer, and is now trading steadily around $ 8,000. This is not $ 20,000, of course, but the numbers prove that someone still needs bitcoin. Following the bitcoin, the rest of the market also revived: most altcoins didn’t manage to recover as much as the first cryptocurrency, but they stopped dropping.
A simple technical analysis of the bitcoin chart demonstrates that BTCUSD is trading in a narrowing price channel. In such cases, analysts predict that the price is going to ripple until the channel turns into a triangle, and then, there will be a breakout either upwards or downwards, and this will set the direction of asset flow for the next couple of years.
Fundamental analysis suggests that there is no reason for a sharp drop in bitcoin. Unlike the beginning of 2018, when the market was overheated, and the rollback was inevitable, now the news background on bitcoin is quite moderate. Bitcoin is neither praised nor thrown mud at, no loud deals are heard, even Libra and TON have no special news – especially since these projects are not directly related to Bitcoin. Therefore, when the breakout happens, more likely it will be an increase than a fall.
On the chart showing the total capitalization of the cryptocurrency market, which takes into account not only bitcoin but also all other digital currencies, a breakout has already occurred. Just on New Year’s Eve 2020, two trend lines formed a triangle, and the cryptocurrency market capitalization increased by about 20% over the month.
Trading volumes are also worth paying attention at: over the past few months, transactions with cryptocurrencies were “accompanied” with sums of money that were several times greater than those on the most rush days of late 2017 – early 2018. The fuss chilled down, the most greedy and stupid guys left with huge losses, but knowledgeable people continue working with bitcoin, and their activity is growing.
The technical and fundamental analysis speaks in favor of the growth of bitcoin. Cryptocurrency has withstood the tests of time and has survived at least two sharp ups and downs. Now, when the topic of the impending crisis is raised again, many people are looking for alternative ways to preserve capital, and bitcoin seems to be an appropriate option. We decided to take the opinions of experts on this issue.
Dmitry Shedko, Managing Director of crypto platform Finstore:
“Bitcoin will continue to exist, it’s interesting for a certain group of enthusiasts who will make transfers, buy, and sell it. The sphere of application will gradually grow. Therefore, bitcoin is not going to disappear as a financial instrument, it will continue to be traded on exchanges, the price of it will rise and drop, like that of any other asset. In the case of a global financial crisis, interest in cryptocurrencies will increase, but it will still be difficult for an ordinary person to make money on investments in them.
Speaking about plans for “world domination”. Nowadays, the global financial system is controlled by central banks, and it’s unlikely they would be eager to give the control to some other community. Therefore, bitcoin has very few chances to become a world currency. “Bitcoin came and went, but the blockchain remained,” there is such a phrase. Blockchain is a really promising technology. As an idea, stablecoins are quite interesting, for example, Libra from Facebook, although they have their own limitations. But I’m sure this is not the last word in the history of the blockchain.”
Elena, crypto enthusiast, an economist in Andersen:
“Bitcoin, as the first cryptocurrency, was an innovation from “below”, not from “above”, i. e. not the initiative of states, but the decision from the people. Practically, it has become proof of the successful operation of blockchain systems. States are now faced with the choice of how to regulate this new phenomenon and how to integrate it into the current financial system.
In fact, the blockchain genie has already been released from the bottle and no one will be able to ignore it for a long time. Now the price of bitcoin is quite favorable for a purchase. It may still drop, but in 2-3 years, its value will be much higher than now. In addition, if a crisis really occurs and traditional assets (stocks, bonds) fall, bitcoin will be one of the investment tools for those who want to save their money.
As for altcoins, I consider them more as private money. Some of them are much faster, more technological, and more interesting than bitcoin. But the issue is about popularization. Therefore, bitcoin occupies a large part in the portfolio of almost every crypto enthusiast now. It is the king of the cryptocurrency market, and when the times of mass interest in the crypto will come, bitcoin will be bought first of all, as the principle of keeping up with jones will work.”
Although experts are divided over how strong bitcoin growth will be, they agree that Bitcoin will live and develop. Dmitry and Elena noted as well that cryptocurrencies will be in demand in the event of a possible crisis. However, one should be careful with investing in cryptocurrencies, because in any case, bitcoin remains a high-risk asset, the price of which changes many times more dynamically than for stocks, indices, and other classic instruments.