2020 started well for the digital gold asset. At the beginning of the year, BTC was trading at $7000 and flew up to $10,000. Crypto traders, Bitcoin bulls, and investors have different opinions on why the coin is climbing the price ladder. At the time of writing, the coin 1 BTC is equivalent to $9799.95.

Between December 2016 and December 2017, we saw the coin’s price rocket from under $1000 to an astonishing $20,000.  The current price surge is not the same, of course, but the Bitcoin experts have various opinions on the current jump.

The Halving

Firstly, it’s the upcoming Bitcoin halving. This an event where the reward for mining new blocks is halved. This means that miners receive 50% fewer bitcoins for verifying transactions. This happens roughly every four years or once every 210,000 blocks until the maximum supply of 21 million bitcoins has been generated. The limited supply of new coins could cause prices to fly up due to high demand. This is referred to as ‘negative supply shock’.

 

Bitcoin BTC miners

Explained: 2020 Price Surge for Bitcoin and Growth Jumps of Altcoins

Bitcoin miners

 

Miners would be highly affected by the halving as the reward for mining would be cut in half, from 12.5 BTC to just 6.25 BTC by the end of April. This has led miners to pause selling their BTC inventory as they are expecting higher prices.

Another important aspect to acknowledge is the adoption rate of BTC. With recent geopolitical turmoil, for example, the emergence of the lethal, novel coronavirus in China or the killing of the Iranian commander Qasem Soleimani. We have seen people invest in Bitcoin similarly to how they invest in gold, which is another safe-haven asset. Bitcoin, along with other cryptocurrencies, became more valuable as people prefer to store them rather than spend them.

The Altcoins

Behind Bitcoin stands faithfully the second-biggest cryptocurrency by market capitalization – Ethereum. ETH has seen a 50% increase since February 2020. The market for the coin remains bullish but, at the same time, strongly volatile, as it always has been.

Other altcoins have gained significant growth too, but most traders know that this sort of liquidity will weaken. To monetize on altcoins, traders need to sell them before the growth cycle is complete. Newer coins have seen significant gains, such as Dash, which is up 254%.

But from a long-term perspective, BTC definitely looks at a bright future. With very minimum drops, and based on its energy value, asset manager believe that BTC’s price will grow by ten times with the next five years. The energy value is counted through mining hardware efficiency and hash rate. Bitcoin’s hash rate has grown significantly.

It is hard to predict the future value of BTC due to its volatile nature and unexpected fluctuations. At this stage, BTC prices have dropped as low as 70% and shot up higher than 600% above its energy value. All that remains is to watch how Bitcoin and other altcoins will perform on the market in order to get an understanding of what will happen with the crypto market, both in the nearest future and on a long-term basis.