Fundstrat has published its 2020 outlook for the cryptocurrency market, and it is looking bullish for the bitcoin price. Thomas Lee, the co-founder of the firm, tweeted a glimpse into the report, the results of which point to more than a doubling of the bitcoin price in 2020. Lee is known for his bullish crypto market predictions but after getting burned in 2018 was more cautious last year. On the heels of bitcoin’s 92% gains in 2019, however, the bulls are back and there are a trio of catalysts expected to push the price higher this year. According to Fundstrat,
“For 2020, we see several possible convergences, that enhance the use case and also the economic model for crypto and bitcoin – thus, we believe bitcoin and crypto total return should exceed that of 2019. In other words, we see strong probability that bitcoin gains >100% in 2020.”
Fundstrat points to the following tailwinds:
- The bitcoin halving in May 2020
- Geopolitical tensions with U.S./Iran
- 2020 U.S. presidential elections
The crypto community is largely split on whether or not the bitcoin halving event planned for May 2020 has been priced into BTC. According to economist Michael Flaum on Twitter, the halving has yet to be priced in. He points to evidence including FOMO as illustrated by Google Trends on the retail side as well as CME futures open interest on the institutional side. He says, “Open interest are almost zero for May and June. ATH in April, halving in May.”
Meanwhile, economist Alex Kruger believes it’s too early to tell whether the halving event has been priced into bitcoin just yet, saying in a tweet:
“Discussing if the bitcoin halving is priced in or not a full *five months* before the halving takes place makes no sense. The date is too far off for the market to have any clarity about it.”
Kruger points to bitcoin miner dynamics, saying that they “speculate with inventories and accumulate,” adding: “Supply may thus decrease at the halving, or even increase if prices are not high enough.”
Meanwhile, bitcoin’s use case as a safe haven was strengthened after investors flocked to the leading cryptocurrency at the height of U.S./Iranian tensions last week. While those fears have since abated, for now, it proves that investors flock to store-of-value assets including bitcoin and gold during times of geopolitical uncertainty. And based on the tone of dialog between President Trump and Iran of late, with Trump most recently warning Iran not to kill protesters, those tensions appear to be far from over.
2020 U.S. Elections
The current U.S. administration has already made its disdain for bitcoin known, and cryptocurrencies weathered that storm in 2019. Meanwhile, there is at least one pro-crypto candidate on the Democratic side with Andrew Yang. As a result, the U.S. presidential elections of 2020 remain a wildcard for the crypto market.
Long Term vs. Short Term
While the long-term outlook for the bitcoin price appears bullish, the short-term picture is murky. According to Mati Greenspan, Founder of Quantum Economics, things could play out in one of two ways, saying in today’s newsletter:
“Volumes have been declining as of late but there’s no denying that price is being squeezed up against this level of resistance. Should we see a solid breakout over the next few days, it’s more than likely it could carry all the way to the 200 day moving average (around $9,000). If not, well I’m afraid the most likely next move could be towards the bottom of the above channel.”