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Crypto’s second boom? Why some experts are tipping Bitcoin to double in value this year

By Dan Cole on 14th June 2020

If you have been following LLM – Luxury Lifestyle Magazine’s extensive coverage of cryptocurrency in 2020, you will know that we are quietly confident that the industry could be about to take another giant leap into the mainstream off the back of the coronavirus crisis.

Fortunately, though, you don’t have to just take our word for it. New York-based software company Bloomberg, owned by former New York City Mayor and 2020 United States presidential candidate Mike Bloomberg, is bullish about Bitcoin’s prospects – prophesising that the cryptocurrency will double in value, reaching the US $20,000 threshold before the year is out.

According to the report, produced by Bloomberg’s senior commodity strategist Mike McGlone, a number of environmental factors are contributing to the company’s confidence in Bitcoin, including the increased trading accessibility through services like the crypto engine app, resulting in the company’s bullish view that “something really needs to go wrong for Bitcoin to not appreciate.”

Bloomberg’s bold position has increased confidence among those who are long on Bitcoin, assuaging concerns in the community about the performance of Bitcoin, which were only heightened by Goldman Sachs’ scathing assessment of the digital currency last week.

But what is fuelling Bloomberg’s optimism? Read on to find out.

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Thousands of people are using cryptocurrencies to improve their standards of living

Coronavirus chaos

While traditional ‘paper’ currencies, like the US Dollar (USD) and Pound Sterling (GBP) have been left reeling by the economic hit of the global coronavirus pandemic, cryptocurrencies, on the whole, have remained fairly steady in these uncertain times.

Many of the cryptocurrency commentariat suggest that this is because Bitcoin, and other digital currencies, behave more like asset classes than currencies. Indeed, this is what much of the debate centres around. Goldman Sachs’ view is that cryptocurrencies are not assets, and therefore are not subject to the same influences as items such as gold, or other precious metals.

However, this is not a view shared by Bloomberg, which goes some way to explaining their confidence. In times of economic depression, with quantitative easing already in play, the value of finite resources, like precious metals, increases against the value of fiat currencies, due to inflation.

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Traditional ‘paper’ currencies such as the US Dollar (USD) have been left reeling by the economic hit of the global coronavirus pandemic

Applying this logic to Bitcoin works, too. There is a limited amount of the cryptocurrency available, and with a ‘halving’ occurring last month (which means that half as much Bitcoin is introduced to the system from that point on), this situation is exacerbated.

With a limited amount of Bitcoin available, its value should, excluding any other factor, increase gradually over time compared with currencies subject to inflation.

‘Digital equivalent of gold’

With us so far? Excellent. Now, when you add to the mix that digital currencies are becoming more and more accepted as a part of our cultural norm, thus increasing potential demand, you can immediately understand that conditions are ripe for a boom in the near future.

Compared with other struggling asset classes, like crude oil, Bitcoin is beginning to show signs of maturity, and a move to the mainstream, as the report said: “The lowest-ever Bitcoin volatility vs. crude oil indicates the crypto joining the mainstream and progressing toward the digital equivalent of gold, in our view.”

Digital currency investors remain bullish about the blockchain’s prospects during this fallow period on the stock market

Back to the future

If present environmental factors were not already enough indication to expect big things of Bitcoin in the second-half of 2020, historical trends also point to a potential value increase on the horizon.

Bitcoin is currently mirroring its 2016 return to the peak, which, incidentally, was the last time the currency experienced a ‘halving’ event. If you consider each four-year period as a part of this particular cryptocurrency’s life-cycle, trends begin to emerge, as the report explains.

“After 2014’s 60% decline, by the end of 2016 the crypto about matched the 2013 peak. Fast forward four years and the second year after the almost 75% decline in 2018, Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend.”

Whether you are on team Bloomberg, or team Goldman Sachs, the rest of 2020 may prove to be a crucial period in the history of the cryptocurrency market.

Investing in cryptocurrencies carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.