KEY POINTS

  • Previous halvings served as a catalyst for Bitcoin's price rallies and the same is expected to happen this year
  • Bitcoin difficulty ribbon compression is now in the green level, suggesting an optimal buying opportunity
  • Most bullish predictions look into the Bitcoin Halving as the primary factor for price appreciation

Analysts are expecting a significant increase in the price of Bitcoin by the fourth quarter of 2020.

According to data analytics firm Glassnode, the "Difficulty Ribbon Compression" is now in the green buy zone level. This is first time it reached the level since the flash crash of March 2020. The metric devised by analyst Willy Woo, called "Difficulty Ribbon," signals the most optimal buying opportunities.

This metric is formulated through the use of simple moving average (SMA) values for mining difficulty. The "ribbon" contracts when miners sell Bitcoin to balance cost and also when they capitulate or when miners turn off their machines to stop mining altogether. When miners capitulate, it leaves stronger miners, who continue to operate. This will lead to price recovery and growth, Cointelegraph explained in a report.

Woo said people should prepare a "great" fourth quarter. "Prepare for a great Q4 2020 for BTC folks (blah blah, de-coupling, blah blah, new correlations). The difficulty ribbon is one of my more reliable personal favorites," he tweeted.

In another chart shared by BitWise, called the spot volume currency index, the price of Bitcoin tends to increase after the Bitcoin halving and if the expected growth is based on how much the price appreciated every past halvings, the benchmark cryptocurrency will likely trade close to $150,000 by the end of 2021.

A number of forecasts are painting a more bullish sign for Bitcoin. One of them is the Stock-to-Flow (S2F) model formulated by analyst PlanB. Driven by scarcity, demand and the decreasing issuance of supply, Bitcoin would increase in price before the next halving. The S2F model is projecting a $55,000 target by the end of 2020.

A more conservative, yet still bullish, outlook came from Bloomberg's Crypto Market Outlook released last June. Driven by the maturity of Bitcoin into a proper asset class and institutional demand, it expects the benchmark cryptocurrency to revisit its previous all-time high level of $20,000 by the end of the year.

bitcoin-2007769_1920 Bitcoin Photo: Bitcoin