In 2019, Cryptocurrencies like bitcoin saw many firsts, many which will undoubtedly affect pricing in 2020.
2019 was a massive year for bitcoin. Continued adoption, better trading options, and better ways to keep your cache safe- bitcoin is getting better. In 2019, bitcoin enjoyed a total market dominance of 66.1%, setting it above all other variants of cryptocurrencies. Bitcoin has reached an all-time high hash rate of 102,848,735 trillions of gases per second. Which means that bitcoin is being traded. Traded well, and traded quickly.
While massive dips and recoveries in the daily markets being a norm for any bitcoin aficionado, the dips seem to be getting less severe while the recoveries are still quick to follow. This can create a difficult playing field for those looking to jump onto the bitcoin scene without thousands to invest.
In the early years, bitcoin was easily purchased with few dramatic oscillations in the market. Should an interested and forward-thinking trader buy a coin or two for under $1,000 USD, leave it to marinate in a wallet for a few years, and voila- the bitcoin billionaire was made. Now, with coins trading at their lowest around $6,000 USD each, it’s harder than ever to bust into the market, making stakes a whole lot higher for anyone involved.
Bitcoin 2020: The Evolution of Bitcoin
Since its humble beginnings in 2009, bitcoin has come a long way in just 10 years. It wasn’t until mid-2010 that the coin itself saw its first true rally, with the price of coins going from $0.0008 to $0.08, which despite its measly earnings potential at that time was a massive jump.
In 2012 and 2013, the famed cryptocurrency saw a surge of adoption. With more retailers and citizen adoption, the price per coin jumped. In the early days of 2013, the bitcoins were trading at about $13.50 each. The market saw a high of $220 that year before crashing shortly thereafter.
In the fall of 2013, the coin once again rallied, until falling prey to a massive drop precipitated largely by the FBI taking down the famed dark web black market trading route, the “Silk Road”. Following this massive shock to the supposedly anonymous and decentralized currency system, the loss of faith was shortly curbed and massive trading platforms began to take a foothold.
By 2014, Mt.Gox, the most popular bitcoin exchange of the time, was helping to move almost 150,000 bitcoins per day. Restoring faith in the system and encouraging buyers and sellers alike. Handling 70% of all bitcoin transactions, with the coins trading at a whopping $1,120, bitcoin seemed to be back in action just a few short months after the US’s raid on the marketplace.
However, due to the newness of the marketplace and less than stellar trust in the trading giant Mt. Gox, the volatility of bitcoin began shining through. Prices jumped from $1,230 to $750 in just days. Then the bottom fell out. In 2014, Mt.Gox underwent what is now a historic hack of the bitcoin community. Thousands of people lost the majority, if not all, of the coins they had invested with the platform. Clients were unable to withdraw any holdings they did have. By February of that year, the price of bitcoin had fallen by 71%.
It wasn’t until the summer of 2015 that the prices began to stabilize and increase, showing once again that the fall held great things for bitcoin prices. Trading at its year high in November. By the following November of 2017, bitcoin skyrocketed to an unprecedented and largely unexpected $10,000 per coin. Prices peaked around $20,000 until falling right back down to below $3,500 by November 2018.
Since then, bitcoin prices while volatile, having hung anywhere between $6,000-$10,000 per coin.
Bitcoin 2020: Price Determinants of Bitcoin
Because of the volatility of bitcoin pricing, it can be notoriously difficult to accurately predict markets. Even when using historically reliable indicators for other markets, there are a few external influences on bitcoin pricing that can be notoriously difficult to foresee. While there are some incredibly dependable factors that affect the price of bitcoin: like block halving and artificial scarcity.
These two indicators set bitcoin far apart from its fiat cousin. Artificial scarcity is the concept of only so many bitcoin being in existence. These coins are all that will ever exist, meaning that once released, no more bitcoin can be created. Giving a clear idea of the availability of coins.
Block halving has to do with the rate at which bitcoins are released. A block is a section of the blockchain ledger that acts a log of every bitcoin transaction that has ever happened. Each block is produced by members of the bitcoin community called “miners”. These miners solve complex mathematical equations that create the ledger of bitcoin transactions. Once these blocks are completed, miners are paid for their efforts in bitcoin. The amount that each miner is rewarded halves each time 210,000 blocks are created, or roughly every four years. Creating another reliable predictor of what bitcoin could end up trading at.
While these two things can definitely help give an idea of what could affect bitcoin price in the future, there are many other social, economic and political factors that can also affect the price of bitcoin. Things like a failing faith in fiat, bitcoin whales arbitrarily controlling prices, and the geopolitical climate all have intense and unforeseeable effects on what to expect from bitcoin in the future.
Bitcoin 2020: Volatility and Security
As the market continues to gain traction, it also gains attention- sometimes from less than ideal entities. Hackers, big business, and governments are all attempting to get in on the business of bitcoin. Making it more difficult than ever to keep your coins safe and anonymous. Which is yet another outside influence on bitcoin price. As we’ve seen historically, if faith in bitcoin falters, the price reacts in kind.
Keeping bitcoin safe from hacks is just one way to also keep trading prices safe from massive dips due to insecurity in the coin itself. The only way to effectively keep your coins safe is to regularly use bitcoin mixers and multiple types of wallets. Using a combination of offline and online storage devices, in conjunction with freshly tumbled coins, can serve to keep your stash from prying eyes.
To complement this article, feel free to read more of our Bitcoin News like: Why is Bitcoin Useful? and Bitcoin Investing: The How and Why of What You Need to Know