What's next for bitcoin
Bitcoin,  Ethereum

What’s next for Bitcoin?

Two things could drive Bitcoin’s price up—or down—in the final weeks of 2020

It’s been three years in the making, but Bitcoin has finally surged past $20,000.

The question now is, what happens next?

What’s next for Bitcoin

Bitcoin is now in unchartered territory, and prices have never been this high. But this bull run is different. Institutions are pumping hundreds of millions of dollars into the world’s biggest cryptocurrency—and there’s no sign of this appetite abating.

You could argue that the biggest danger to BTC’s dramatic surge is the holiday season, when some traders will start logging off for Christmas and New Years. As weekends often spark volatility in the Bitcoin markets, the low trading volumes mean the first cryptocurrency is prone to dramatic surges and painful pullbacks.

It might be wise to buckle in, as we could see a whole week of this activity as 2020 draws to a close.

Of course, past performance doesn’t always indicate what’s going to happen in the future. But back in the final half of December 2017, Bitcoin lost more than a third of its value after touching highs of $20,089—taking it all the way back down to $12,950 by New Year’s Eve. Bulls who passionately argue that history repeats itself also need to factor in the prospect of sell-offs if their argument is going to hold any weight.

A dramatic December?

There are also a couple of fundamental factors that could affect Bitcoin’s price over the next few days: one favorably, one negatively.

Over in Washington, talks over a stimulus package for the U.S. economy stubbornly continue, with the mood music suggesting that a $900 billion deal is close to being reached. It’s highly likely that a breakthrough would be bullish for Bitcoin—underlining the cryptocurrency’s appeal as an asset with a fixed supply as the Treasury fires up the money printing machines, weakening the U.S. dollar in the process.

Then again, there’s also the threat of new regulations that could target the cryptocurrency sector, with Treasury Secretary Steven Mnuchin reportedly weighing whether he wants to impose new restrictions on self-hosted wallets. It’s highly possible that this could spook the markets, with Coinbase CEO Brian Armstrong recently warning such measures would have ramifications for the entire sector.

The longer term

Provided that Bitcoin’s new price point can endure, all eyes will be on where BTC could head in 2021.

Some analysts believe that $22,000 or $24,000 are near-term price targets that need to be hit if there is going to be any further movement.

Beyond that, a sizable number of crypto pundits believe that Bitcoin could double yet again (and then some) as more institutions gain exposure.

As Bloomberg’s Mike McGlone recently argued, $50,000 could serve as resistance for BTC next year… while $10,000 will become a critical support level.

“The year 2020 will likely be looked back upon as key to Bitcoin’s mainstream evolution, in our view,” he wrote.

It’s also worth keeping an eye on altcoins in the coming weeks and months, as investors look for new adventures after using Bitcoin as a gateway into the crypto markets. Indeed, ether cracked $600 on Dec. 16, reaching nearly $628.

Scott Freeman, a co-founder at JST Capital, told Reuters: 

“It would not be surprising to see other coins follow in BTC’s footsteps and for this upward trajectory to be sustained into 2021.”

 You May Also Like

Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.