This is a big week for bitcoin.
The world’s largest cryptocurrency by market capitalization will, I believe, experience a breakout hitting $12,000 before the end of 2019 — if it stays above the $8,500 support this week.
Bitcoin’s 20 percent surge last weekend brought an end to the lull period we’ve seen recently, and as it stands, has resisted the so-called death cross, a bearish pattern that occurs when the 50-day moving average drops under the 200-day moving average.
In the past, the $8,500 support has been an imperative support for bitcoin. As such, if the bitcoin bulls can maintain the price above this during the week, the world’s largest cryptocurrency will experience a breakout and hit the $12,000 mark before the year is out.
This most recent surge was fueled by Chinese President Xi Jinping referring to the adoption of block chain, the technology that underpins cryptocurrencies, a significant breakthrough for the independent innovation of core technologies.
This is a clear indication that the president of the second largest economy in the world is leaning towards this technology, which bitcoin plays a crucial part, and subsequently viewed as a positive boost for the crypto sector as a whole.
Indeed, perhaps somewhat prudently, investors could not disregard the comments and sentiment shown by the Chinese president, and therefore responded by increasing their exposure to bitcoin.
Furthermore, it comes at a time when China is said to be developing its own national digital currency, which is an additional sign that digital currencies are the future of money.
This was reinforced earlier this month when two U.S. Congressmen asked the Fed regarding future plans to launch a digital version of the U.S. dollar.
Rep. French Hill, R-Ark., and Rep. Bill Foster, D-Ill,, sent a letter to Federal Reserve Chairman Jerome Powell saying that the “nature of money is changing” and urging the central bank to “leverage on its ability and role to develop a national digital currency.”
In addition, as history has taught us, momentum, in part led by FOMO (the Fear Of Missing Out) will now increase in pace again in the crypto sector. If maintained this week, I’m confident bitcoin will reach $12,000 before the start of next year.
The momentum in the digital currency sector will also be fueled by underlying fundamentals including geopolitical issues.
These include the trade war between the U.S. and China, ongoing Brexit uncertainty, as well as the global economic slowdown. All these factors are inciting exposure to decentralized, non-sovereign, secure cryptocurrencies.
Moreover, price gains will also be propelled by the technical improvements that have boosted the performance of digital currencies, as well as the upcoming 2020 bitcoin halving.
The bitcoin mining code halves around every four years, with the next one scheduled for May next year. As the code halves, miners receive 50 per cent less coins every few minutes. As we’ve seen over time, there is usually a substantial bitcoin surge stemming from halving.
However, perhaps the most significant factor is that public awareness and understanding of crypto is growing all the time. Digital currencies, particularly bitcoin, are increasingly part of mainstream finance.
We’re not just seeing this in the financial sector, but there is also mounting interest among governments and institutions as well as within the technology and retail sectors.
Therefore, with $8,500 being a key support for bitcoin, should the price stay over this level, the positive sentiment will be heightened, and we would witness close to year-highs.
Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.
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