Bitcoin price reached an all-time high of $19,891 in December 2017, before starting a downward spiral that it only recently recovered from. In order to examine whether or not Bitcoin will reach all-time highs again in 2019, we need to understand what exactly makes the price of bitcoin move up and down.
So what drives the price of Bitcoin? What is it really worth? The primary problem is that the bitcoin price fluctuates very rapidly based on a few reliable metrics. It trades mainly on investor sentiment and political statements and that’s one reason for the bitcoin market’s massive volatility.
BTC, more than anything else, is a gauge of customer fear, especially in the USA. As things get more dangerous and volatile, its price tends to shoot up. Its recent rise could possibly be correlated to the Texas shooting incident, which has put the US populace ill at ease.
What happens is that traders expect this to push bitcoin up, and they then add to the trend by creating more buy orders. As a rule of thumb, the higher the instability, especially in the US economy, the higher the price of Bitcoin will rise.
Of course, Bitcoin does have an intrinsic value – it’s just very difficult to ascertain, especially in a world of derivatives trading. But its adoption rates are increasing. Customer confidence is growing. Many proclaimed it dead after its drop in 2018, and in true antifragile fashion, it seems to have bounced back stronger than ever. Additionally, the launch of other cryptocurrencies, such as Walmart Coin and Facebook’s Libra, could push the adoption levels of Bitcoin even higher.
It’s possible, but not probable, to see Bitcoin surpass $20,000 in 2019. It’s more likely to hit this figure sometime in 2020. And when it does hit it, it could easily bounce back to $15,000 or below.
The continued issue with the value of bitcoin is its lack of stability. Unfortunately, never has an asset class been less tied to its actual value. The price does not represent the strength of the underlying network. For example, with the same number of nodes and level of adoption, the price could increase by 20% – simply because a large number of traders are speculating on price moves, or a trading whale decides that it’s time to make some big moves. Similarly, the price could go down too.
It’s a safe bet that the trajectory of bitcoin is looking up – a more pertinent question is when, how high, and for how long. Many people believe that a Bitcoin is worth $20,000 or more, and for this reason, the trading price could soon reflect this value.
It might take some time, but eventually, the value of the asset class will shine through. It could easily reach $20,000 sometime in the following months and stabilize at the support level of $17,000 or so. This would establish a new baseline for its price that may hold into the future.