Three Crucial Principles to Follow that Can Define Bitcoin’s 2020 Trend
This year is a crucial period for Bitcoin. Another block reward halving, which happens one time every four years, should occur at the end of spring. Besides such halving, investors have to take into account three significant basal factors.
The three peculiarities are:
- the hash speed of the Bitcoin blockchain network
- the general amount of unique addresses on the network
- the betterment of institutional infrastructure surrounding it
Factor №1: Hashrate and halving
In May this year, the third block reward halving in Bitcoin’s story will be promoted. It will reduce the remuneration miners gain by mining blocks on the Bitcoin network in two times.
As far as miners frequently merchandise BTC they mine to maintain their working, it will lessen the supply of BTC into exchanges and over-the-counter platforms, influencing the revolving inflow of BTC.
Because of the fixed 21 million supply of Bitcoin, BTC is in short supply. That is, in reality, deflationary. That is why any event that influences its deficit will, with no doubt, have a considerable effect on the cost dynamics of the asset.
Will that affect come in the short-term or the long-term? This question stays mainly discussed. Historical data indicates a post-halving sell-off, and it took about 6 to 12 months after the halving for bitcoin to notice a widened rally.
Factor №2: Amount of unique addresses
The general amount of such addresses is a crucial part of the information to measure user activity on the crypto network.
Since a significant number of users seek to generate new addresses on an orderly basis, the amount of unique addresses is the most precise way to evaluate the natural rate of expansion of BTC.
According to an on-chain data provider, during the past two years, there were 450,000 unique addresses. In early 2018, the Bitcoin cost was fluctuating near its all-time high, and it indicates that despite the 60 percent fall in value, user activity has not decreased as much as it was expected.
Factor №3: The enhancement of institutional infrastructure
2019 was the first period the cryptocurrency field noticed the appearance of regulated and structured institutional items. Some existing exchanges launched custodial services, and a few new firms released futures products for accredited investors.
In his end of year review, Brian Armstrong, Coinbase CEO, noticed that many institutional investors have affiliated to Coinbase Custody. He said he is waiting when every institution will get into crypto in the future. Armstrong’s speech:
“Finally, every financial institution will have some sort of crypto operation, and most funds will store a part of their assets in crypto, because of the uncorrelated returns and growth potential.”