Bitcoin surged about 22% in the first 15 days of the new year 2020, posting the best early-year increase since 2012 for the first time, according to a Wall Street Journal report.
The digital currency is approaching the $9,000 threshold in just two weeks of 2020, with the demand for the world's largest cryptocurrency rising, and investors and crypto enthusiasts expecting institutional interest to drive prices higher during the year.
Other major cryptocurrencies are up YTD so far, with Ethereum and Ripple up 29% and 23%, respectively.
There are several factors fueling the hopes for the rise of the bitcoin currency, including the launch of global markets by CME Group, options linked to bitcoin futures, where it created a new tool for institutional investors to buy the cryptocurrency.
Opinions have grown that Bitcoin can be used as a hedge against market volatility, tensions, and geopolitical turmoil. Trade CFDs for Cryptocurrencies The price of Bitcoin witnessed a big jump that came in conjunction with the tense events in the Middle East, especially the escalations between the United States and Iran.
At the beginning of this week, Tehran responded to the US air attack that targeted the Iranian commander, “Qassem Soleimani” and led to his killing, with several missile strikes on US bases in Baghdad, and with the intensification of tension between the two countries, the value of Bitcoin rose to nearly $8,500, its highest level. In two months, about a rise of 10%, before rebounding by 6% near the $8000 level after the speech of US President “Donald Trump” where he said that the attacks had limited damage, as Iranian Foreign Minister “Mohammed Javad Zarif” stated that it was satisfied with the response and that his country did not want war.
The sharp and sudden movement of bitcoin has reignited a long-running debate: will bitcoin become a safe haven like gold, in times of increasing geopolitical and economic turmoil, or will it be a fringe tool used for cybercrime.
It is interesting to note that while the value of Bitcoin soared in the wake of the airstrike, US stocks fell as investors worried that the conflict between the two countries could escalate into a prolonged and devastating World War III. Indicates that the market was choosing to ignore the escalating war.
Bitcoin jumped strongly again, breaching the $8,700 level, following the launch of CME, one of the regulated financial markets offering bitcoin-related products, represented by bitcoin options.
Although these options are cash settled allowing future traders to hedge risk and create more profit opportunities in the Bitcoin market, it is a sign that institutions continue to delve into this emerging market.
Experts believe that institutional participation in Bitcoin is a bullish sign that could help spur long-term growth in the industry.
Leading financial analysts predict that Bitcoin will witness gains in 2020, which may be by 100%, citing three factors:
1. This year Bitcoin will experience what is known as halving, when the number of coins issued on each block is halved, it will actually lead to a 50% drop in the cryptocurrency’s inflation rate.
2. Geopolitical risks may be a boon for Bitcoin. As conflicts continue between the US, China, the US, Iran and others, Bitcoin will begin to establish itself as a digital store of value.
3. Some may claim that the 2020 elections will have a role in supporting the cryptocurrency market.