The price of bitcoin in the coming months with halving at the door could increase according to fundamental analysis.
Furthermore, if we consider the technical indicators, the increase in the price is confirmed.
Let’s start with order and see the data that will increase the price of bitcoin in the coming months.
The current situation with technical analysis
This level is very important because as we can see it has generated imported movements such as the famous end of 2018 correction.
Or two very obvious bull runs, one is the one that brought the price of bitcoin to historic highs and one where the price stood at $ 13,000.
So we can say that this level represents an important resistance in the long run for bitcoin, where if it is violated upwards a bull run is expected, instead a fall would lead to a strong bear market phase.
Furthermore, if we consider the indicators including the moving averages (50 and 200), we can look at how an upward trend is already underway.
In the image above we can see how the intersection of the two moving averages generated important trend phases, the same regarding the resistance on the $ 10,000.
The intersection of the two is developing to date, which as I said before a confirmation of the upward breach above $ 10,000 would bring bitcoins to touch the levels of $ 13,000 or more.
If we consider only the technical analysis by looking at the data above, we can say that a possible bullish scenario may be upon us.
The basic data on bitcoin
If we consider other data on bitcoin such as halving, we can see how the price increased after the event.
In the image above we can see how the two previous halving generated two historical highs for the price.
Starting from an expansion phase and then correcting before halving and then expanding new ones to higher levels.
This figure represents a factor to consider because historically it has made a difference.
In addition, another figure that I would consider important is that on the growth of the network itself which has increased greatly since its inception.
The latest figure that we have is reaching the levels of the end of 2017 where the maximum peak has been reached.
But also the number of transactions reached on the network shows us how the network is increasing.
Another data that I would consider is the mining computing power that has reached very high levels exceeding those of the end of 2017.
In fact, with these levels, the increasingly secure and efficient bitcoin network is being drawn up.
The image above shows how the hash rate, i.e. the computing power to solve a block, has increased significantly.
Considering these data excluding the technical analysis, we can say that the price of bitcoin statistically has a good chance of increasing in the long run.
The stock to flow model
A statistical model has recently been developed on the web, modified by the well-known trader PlanB, which shows the development of the bitcoin price based on stock and flow values.
These two values represent:
- Stock: supply of circulating Bitcoin
- Flow: annual production of Bitcoin by miners.
The model has been modified on what was used in gold and through mathematical calculations, assumes the price of bitcoin in the future.
Here you can see the live chart updated daily.
In the image above we can see how the model follows a constant line that projects the price over time gradually increasing.
Furthermore, if we see the times when halving occurred, the price has risen dramatically.
This is because total supply and production are, in fact, decreased by halving.
Still in the image above we see how the purple line increases drastically during halving, instead the blue line is the one that projects the price on average over time.
The model so far has not made a mistake perhaps because it has few data still taken into consideration, but it is not said that it will be the same in the future.
The fact remains that considering this model combined with a little technical analysis and fundamental analysis, it should not be so utopian.
Another factor that I would consider is the possible regulation that could come this year from the SEC.
This event could represent progress because it would later create investment funds such as ETFs on the cryptocurrency.
And history teaches us that in the past ETFs have generated a considerable flow of investments, see gold.
In 2019 we witnessed a release of Futures on Bitcoin with the well-known company Bakkt which favored growth on this asset.
In fact, this has led to the development of open interest on Bitcoin, paving the way for new contracts.
According to a recent statement, the United States Treasury Secretary, Steven Mnuchin, said:
“We want to make sure that technology moves forward, but on the other hand, we want to make sure that cryptocurrencies are not used for the equivalent of old bank accounts with secret Swiss numbers”
But even Federal Reserve Chairman Jerome Powell admitted that cryptocurrencies and the creation of a Fed coin are being lost.
So regulation is being seen on the horizon also because the US needs to regulate this sector.
Also driven by China which for its part is far ahead of them without thinking about countries like Malta, Switzerland and Japan that have already regulated the sector.
A possible regulatory scenario could be very positive for bitcoin as it would pave the way for new capital.
As we have seen the scenarios that could be expected on the bitcoin price are most bulls (bullish).
This is because there are many factors that increase interest in this type of asset.
But this does not mean that bear scenarios could also be present, for example, another cryptocurrency could be developed that would absorb bitcoins.
Statistically this is very improbable but not impossible therefore I invite you to always read up on the investments you make and take these words as an idea.
The fact remains that to date bitcoin has brought about many changes in the financial sector by creating new technology.
In fact, even if bitcoin could not survive, it leaves us a technology that represents a remarkable development.
That’s why it’s all in the next article.