Over the last couple of weeks the bitcoin price has expressed intensified levels of volatility, given the fact that its value has increased by $2,000 within 3 days, between the 24th and 27th of October, thus reaching a value of $9,548. However, this bull-run wasn’t long-lived granted that the price has once again decreased to the $8,750 threshold at the time of writing.
This article is meant to serve as an analysis into what triggered this month’s price volatility, while also offering several short and medium-term predictions.
To kick things off, it is believed that October’s massive volatility was triggered by the recent news in China, where President Xi Jinping announced that China is now very much interested in blockchain technology and its potential use cases. Similarly, Bitcoin was also referred to as ‘blockchain’s first success’ by the Xinhua news agency.
At this point in time, market analysts throughout the world are well-aware of bitcoin’s potential from a value standpoint. After all, the cryptocurrency managed to surpass $20,000 in late 2017. This fact encourages technical analysts throughout the world to believe that a new massive bull run may be coming up within the next few months.
At this point in time, there are two main arguments in favour of a new bull run.
The launch of CME Options in January
If regulatory approval is obtained, than the Chicago Mercantile Exchange will launch a series of bitcoin-based institutional investment products. As such, bitcoin options will serve as an interesting financial instrument for investors that are looking for flexibility and risk management precision. Bitcoin futures already exist, therefore the introduction of Bitcoin options will likely lead to increased market demand, while also improving overall liquidity.
The upcoming Bitcoin halving event in 2020
The bitcoin protocol was originally coded to ensure that the block rewards given to miners (which is the only way to mint new BTC) are cut in half after every 210,000 mined blocks. So far, several halving events occurred, thus leading to price increases, as the supply drops and the demand increases. So far, it is believed that the next halving is bound to take place around May 2020. Once this happens, the current 12.5 BTC block mining reward will be reduced to 6.25BTC. This protocol also ensures that the limit of 21 million bitcoin will be reached sometime in the 2140s. Therefore, if current market conditions have continuity, bitcoin will remain sustainable until then. Afterwards, miners will be incentivised through transaction taxes alone, if no other major change is implemented into the Bitcoin protocol.
Based on these aspects, one could argue that purchasing and holding bitcoin at this time is a smart investment idea, given the potential upcoming bull runs. After all, analysts are predicting that BTC will reach the $20,000 threshold within the next few months.
Last but not least, this does not constitute trading or investment advice – any crypto-based purchase is made at your own risk. Thus, carrying out your due diligence is essential.