The price of the flagship cryptocurrency on January 1, 2020, saw a slight plunge of 0.70 percent against the U.S. dollar on a daily scale. The number one cryptocurrency had rallied above $7,500 on December 23 before succumbing to downside pressure shortly afterward.
Despite many expecting a Santa Claus rally, bitcoin has not made any solid ground since Christmas. Now, the first day of 2020 is seeing bitcoin continuing its consolidation as it remains under the grip of bears. Could bitcoin recover in Q1 2020? It certainly seems possible, especially keeping in mind two significant catalysts.
What Are The Two Vital Catalysts?
Two factors converge to confirm bitcoin’s optimistic outlook for the first quarter of 2020:
Macroeconomic fundamentals are set to grow stronger, particularly in the first quarter of the new year, and these events could launch BTC into a bull market. Case in point, a “Phase One” US-Sino trade pact will be signed on January 15, US President Donald Trump opined on Dec 31.
He noted in a tweet:
“I will be signing our very large and comprehensive Phase One Trade Deal with China on January 15. The ceremony will take place at the White House. High level representatives of China will be present. At a later date I will be going to Beijing where talks will begin on Phase Two!”
Historically speaking, a de-escalation of the trade conflict has driven investors towards stocks as they no longer have a high appetite for safe-haven assets. As the US-China trade war escalated in May last year, bitcoin eked out significant gains as many investors were hedging against the trade tensions. Now, with the signing of the first phase of the trade deal in January, bitcoin will likely fall to the sub-$7,000 regions.
But, a correction in early 2020 isn’t necessarily something to fret about. In fact, some analysts predict that a tumble below $7,000 would pave the way for more accumulation before breaking out in an impressive rally.
Upcoming bitcoin block reward halving
Even though bitcoin ended 2019 without a bang, a majority of crypto observers are positive that the digital asset will have a stronger 2020 thanks to the highly awaited halving event. Before the day itself, bitcoin could recover to $9,000 in Q1 as traders scoop up BTC with the anticipation that they will sell at substantially higher prices after halving.
As bitcoin becomes scarcer, there’s a high chance that it will blast off following the halving. As such, bitcoin could easily register a new all-time high in 2020.
Though bitcoin has been on a steady downtrend since July 2019, all hope is not completely lost. Bitcoin has been the best performing asset of the last decade and will likely continue growing in this new year (and decade). Moreover, the digital currency has outperformed most traditional assets despite being a nascent asset itself.
It is also noteworthy that bitcoin’s hash rate rose from around 40 EH/s at the beginning of 2019 to as high as 111 EH/s on December 22. Moreover, according to popular analyst Rhythm trader, bitcoin’s hash rate is presently almost seven times larger than it was during the 2017 crypto euphoria period when it smashed $20,000. This impeccable growth in the hash rate, regardless of the turbulent year for its price, implies that the long-term picture remains intact.