While the trade volume of Bitcoin is higher than ever, the fact still remains that most Bitcoin is being held for the long term. According to a recent study by Delphi Digital, 59% of Bitcoin is being withheld. A period of 12 months is deemed as long-term for the purposes of the report. This figure is an all-time high compared to previous years.
Bitcoin investors were always accused of HODLing, HODL being a funny acronym for ‘Hold on for Dear Life’. But right now, people are doing it more than ever. And the reason for this is quite obvious. It is becoming more and more evident that 2020 is set to be an incredibly volatile year for Bitcoin. It is the year of the US Presidential elections. But it is also the year of cryptocurrency.
German banks are now cleared to buy and sell cryptocurrencies, which should really bolster liquidity and prompt other banks to do the same.
China is releasing its own cryptocurrency in 2020, and other superpowers will have to follow suit or be left behind. Libra is also set for release, if it can get the all clear from US regulators.
All of these will likely translate to an increase in the Bitcoin price. The Bitcoin price is currently stagnant around the $7,100 mark, and has been for weeks.
Following Bakkt’s opening on September 23rd, the Bitcoin price dropped sharply by 20% in less than 4 days, and never really recovered. With 2020 just around the corner, there has never been a better time to hold onto Bitcoin and keep it for the long-term. The Bitcoin halving event is also set to take place in May 2020. Every year following a Bitcoin halving event, the Bitcoin price has increased significantly.
It might become a self-fulfilling prophecy. As more and more people are hanging onto their Bitcoin instead of spending them, the Bitcoin price could rally as the supply becomes scarcer. The number of Bitcoins held for more than 5 years has also risen. These people are set to make an enormous amount of money.
However, it is unknown what percentage of this number includes Bitcoins that are forever lost. Many people have forgotten their wallet keys, meaning that those Bitcoins will simply never move. This happened quite often in the beginning and is a necessary feature of the ecosystem. If the wallet keys were handed to a third-party, then it would defeat the purpose and be no more than a centralized system.
The Bitcoin price is widely expected to increase in 2020 due to a confluence of factors, and this is what will most likely materialize. The liquid supply is decreasing, the mining difficulty is increasing, scalability and adoption are higher than ever, the Lightning Network is making transactions quick and free, and banks are now warming to the technology. It will be an interesting year for Bitcoin, and one that will likely see the Bitcoin price increase.
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