Posted 2 years ago | by Ben Armstrong
Bloomberg Report Predicts Bitcoin Will Be A Store of Value – Like Gold
According to Bloomberg's 2020 crypto outlook report, which was published last week, analysts predict Bitcoin's price could reclaim the highs of its 2019 range in 2020. A price target of $14,000 USD was suggested in the report.The factors that could drive Bitcoin higher are a weak US Dollar, stock market volatility, and rising geopolitical tensions.
According to the report:
"Bitcoin's initial reaction to the [Jan. 3] U.S. airstrike that killed one of Iran's most powerful generals was a good test of our premise that the first-born crypto is maturing toward a digital version of gold.”
The supply of Bitcoin can't be increased to meet hogher demand, which is similar to how the gold market functrions. It has long been seen as "digital gold” by many in the crypto community. Block rewards will be dropped from 12.5 to 6.25 BTC in the halving event that is expected in early 2020, adding to supply pressures.
Bullish Factors in the Bitcoin Market
The report from Bloomberg outlined a number of things that could push Bitcoin prices higher in 2020 and beyond.
“Bitcoin's supply is projected to grow by about 2.5 percent in 2020, which would be an all-time low. That's partly due to the halving of the block reward – from 12.5 to 6.25 BTC. Supply in 2021 could well fall below 2 percent.”
Analysts think there are many forms that Bitcoin investment that may drive prices higher. The derivatives market for Bitcoin is expanding, and this may also draw liquidity to the space. It also reinforces Bitcoin's status as a store of value, and will allow larger companies to hedge volatility risk more effectively.
Not as Good as Gold...Says Mati Greenspan
Meanwhile, the founder of Quantum Economics, which specializes in cryptocurrencies and foreign exchange, Mati Greenspan, said the tie between gold and Bitcoin is a “weak” relationship and noted that the correlation between the two assets was negative recently.
However, the Bloomberg report predicts that tether's market cap will keep expanding in 2020, with many alternative cryptocurrencies bought alongside of Bitcoin as investors wake up to the sheer number of options in the market.
The report from Bloomberg added:
"Bitcoin should again outshine most crypto assets in 2020 as the unique and appreciating digital version of gold...Bitcoin is winning the adoption race, notably as a store of value in an environment that favors independent quasi-currencies."
With the strikes on Iran's senior military leadership in the early days of 2020, it isn't difficult to see a geopolitical dynamic emerging that would support any asset class that offers a hedge against government assets, Bitcoin included.