Tuesday, July 7, 2020

Bitcoin price drops below $8000 despite bullish predictions

The Takeaway:

Despite the Bayerische Landesbank's prediction of Bitcoin reaching $90,000 by 2020, the price continues a downward correction. Price further declined on Sunday as the price tested the support levels of $7,800-$7,500. A further decline will take the price toward the $7,000 support levels.

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The recent market crash at the end of September has left the cryptocurrency market wounded as the prices struggle to regain a bullish trend. From trading at $10,000 to a sharp decline to $8,000, Bitcoin is facing a hard time gaining bullish momentum.

BTC price further declined on Sunday when the currency dropped to below $8,000 and tested the support levels of $7,800. The latest drop makes the bank’s predictions look like a joke. Bayerische Landesbank, in a report, predicted that the Bitcoin price could hit $90,000 by 2020.

The German Bank’s research team used the stock-to-flow approach to make such a prediction for the future price. The high stock-to-flow ratio means that large supply, when compared with a limited production, makes the asset hardened against the major factors that can affect its price. The same team found out that the stock-to-flow ratio for gold was high, but Bitcoin would overtake it at a rapid rate.

A large part of the price prediction depends on the Bitcoin’s scheduled halving next year. With the halving, miners will receive less incentive for the process that will add blocks to the blockchain, and with the cost of mining operations increasing, many will abandon the activity. With a decrease in the flow of Bitcoins, the existing supply will become more valuable.

The halving is just one of the factors that affect the price as ultimately, all this depends on how much people would pay for the coin as its demand will play a major role in price prediction. Bitcoin crossed the 200-day moving average on 26th September, and since then, it has been trading below it. This indicates a long-term bear dominance in the market.

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Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

Charles Carter
Charles Carter
Charles is an experienced researcher with a Master of Public Administration degree from Humber College, Canada. Apart from being fascinated about blockchain and cryptocurrencies, he loves to drive around the town in his collection of cars.

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