Anyone who has been involved in the crypto industry for very long will realize that Bitcoin is at the heart of many different trading strategies. Since it was first introduced in 2009, Bitcoin has not only been the oldest mainstream cryptocurrency in use, but it has also been (overwhelmingly) the most frequently traded. Even when some coins, such as Tether, briefly eclipse Bitcoin in monthly trading volumes (both are experiencing volumes around $16 billion), the coin’s longevity and market dominance cannot be overlooked.
As a whole, the cryptocurrency market moves along with Bitcoin. When the market is doing well, Bitcoin will likely experience corresponding price increases (and vice versa). Because of this, Bitcoin will often be used as a base coin, even among traders who are much more interested in alternative coins (altcoins). As a result, anyone who hopes to earn strong returns on their initial cryptocurrency investments will need to pay close attention to Bitcoin’s price movements, along with the movements of various technical indicators.
In this article, we will briefly review some of the ups and downs Bitcoin has experienced over the course of the year 2019. While the correlations between Bitcoin and various crypto ETFs are not perfect, focusing on this coin’s specific movements will make it much easier for traders to understand the broader momentum of the market as a whole. It will also be crucial to examine how—using various fundamental and technical indicators—we can predict Bitcoin will perform in the year 2020.
How Bitcoin Performed in the Year 2019
Bitcoin began the year trading around $3,800 per coin. Considering the coin was once valued at nearly $20,000 per coin (around December 2017), many investors began the year with a justifiable sense of urgency. Over the first few months of the year, the coin’s price remained within a somewhat contained range. But by the beginning of the summer, Bitcoin would enjoy a price rally that it had not experienced in years.
Over the course of the middle of the year, Bitcoin’s value more than tripled and eventually approached the $13,000 mark. Some investors began claiming that this was the beginning of the “million-dollar march” they had been hoping would occur for years. However, towards the end of the year, Bitcoin has begun to experience some struggles. The coin began a steady decline and, as of early December 2019, is currently trading just above the $7,000 line. Naturally, all of these price changes have made it difficult for Bitcoin speculators to determine whether the coin is currently overpriced or underpriced.
Why Did Bitcoin Experience a Year-End Value Decrease?
Bitcoin’s year-end drop has not been as large (or as sudden) as price drops of the past, but traders of all stripes are naturally wondering what caused the price to go down. Unsurprisingly, it seems that there are multiple relevant price forces at play.
As global trade tensions have increased, capital has become scarcer, which—as history has demonstrated—leads many traders to abandon their “pet” or riskier investments (such as cryptocurrencies). With lower levels of demand and relatively less utility, natural market forces have caused an at least temporary price reduction to occur. Additionally, increased competition from alternative coins has caused Bitcoin to lose some of the prestige it has enjoyed in the past. Without constantly finding new ways to add value, the novelty of being first to market eventually begins to wear off. Bitcoin’s value is currently largely constrained by its limited growth in utility and outright hostility from various governments around the world.
Moving Forward: Is Now a Good Time to Begin Investing in Bitcoin?
2020 will likely be just as difficult for Bitcoin holders to navigate as 2019 was. Some traders think that $7,000 may be the coin’s new floor, meaning that now is the perfect time to invest. However, others who have seen the coin lose more than 80 percent of its value within a single month are a bit more hesitant to be so optimistic. Whether investing in Bitcoin makes sense for you will depend on your personal level of risk tolerance, as well as your long-term cryptocurrency trading strategy.