Could bitcoin surpass $20,000 by year end?

6 min readJul 28, 2020

Hi everyone,

It’s a privilege to exist in a time that will be remembered as a pivotal moment in human history.

Right on time, bitcoin and altcoins reclaimed the $300 billion landmark, in part as a consequence of unlimited cash handouts, central bank stimulus packages as well as favourable crypto events transpiring all around the industry. Indeed, the turning point for crypto is fast approaching and many will be caught by surprise when the big leap happens.

In any case, let’s dive into the big ideas, and even bigger stories!

US court declares bitcoin as money

At this point, it comes as no surprise that another US federal court ruled that Bitcoin is a form of “money” covered under the District of Columbia’s (D.C.) Money Transmitter Act. The conclusion came as part of a criminal investigation involving the US versus Larry Dean Harmon, who operated a bitcoin mixing platform.

Financial regulators in the US have debated the status of bitcoin as a commodity or a security for years. Some investors like Jim Rogers have even been expecting some sort of a “government ban” on the cryptocurrency — which doesn’t seem to be anywhere in sight. In fact, it’s safe to say that this narrative is dead in the water.

While a US Federal court ruling doesn’t send any shock waves through the industry, it serves to bolster a clear trend that speak to increasing recognition of bitcoin for what it is — a store of value and medium of exchange.

Exchanges see increased bitcoin inflows

For the first time since January, more bitcoin has flowed into crypto exchanges than out, according to data from Glassnode.

The report found that more bitcoin has entered exchanges this month than left it, reversing the trend that saw investors pulling their bitcoin into private wallets. While the inflows aren’t ground-breaking, the trend reversal is significant given that around 92,000 bitcoin flowed out of exchanges during black Thursday.

This was the largest bitcoin drain within a single month, or as Glassnode put it: “ the largest and most prolonged BTC exchange balance downtrend in bitcoin’s history.”

The question is: what’s causing the shift?

A possible answer is the rise of altcoins such as Dogecoin, which Elon Musk directly helped to pump to double digits by tweeting about it.

Considering bitcoin’s drop in dominance from 68% to about 62% since May, it would make sense for bitcoin inflows to accelerate due to the fact that traders would use their bitcoin to buy altcoins — possibly in an a short-term attempt to stack more satoshis.

Should this trend continue, it’s conceivable that bitcoin’s dominance will reach fresh lows as investors take a risk-on approach to cryptocurrencies.

The incoming wave of DeFi might aid in this disruption, but as alluded to in a previous newsletter — it doesn’t take much to pump a small-cap altcoin and exit scam after a 100x.

Technically speaking

Bitcoin (HTF) moving to the upper limit

Bitcoin has surpassed expectations and blown straight through the $10,000 area as it attempts to reclaim the elusive $10,500 pivotal price-point.

In prior newsletters, the $10,500 level was mentioned as a significant level, largely due to historical precedent.

A daily close below $10,500 would open the possibility of re-visiting the bottom of the channel in the coming weeks at around $9,300. On the flip side, reclaiming this level would open the flood gates to 2019 highs around $14,000-$15,000.

As it happens though, a clear TD-9 sequential has just flashed on the daily chart, in addition to both the RSI & MFI moving into overbought territory. Typically, a 1–4 candle correction should be anticipated once this signal flashes, which would be a healthy retracement before a probable resumption of the upward trend. However, these indicators do not guarantee a move, but serve to offer a better perspective on bitcoin’s probabilistic outcomes. After all, market euphoria would not take any indicators into consideration.

Additionally, it’s important to bear in mind that a noteworthy bitcoin CME gap has now developed. As such, it’s conceivable that bitcoin retraces to $9,600 to fill it, given that such gaps have a tendency of filling sooner rather than later (possibly to tap into left-over institutional liquidity).

Meanwhile, bitcoin is also on the verge of breaking a 3-year downtrend, as per the below 2-day chart. Setting an interim higher-high above the 2019 mini-bull market would be bullish, setting bitcoin down the path of least resistance to all time highs by 2021.

Depending on how price-action develops in the coming days to weeks, there’s also a case to be made for a $20,000 bitcoin by the year end. Aside from the backdrop of infinite central bank cash and fresh all time highs in both gold and silver, market structure could be signalling a long-term double-bottom pattern with a bear trap (12th March).

For things to turn euphoric though, a decisive $1000 — $2000 daily or weekly candle would be needed to clearly set the narrative and tone.

Finally, data from Coinalyze is now showing open interest going parabolic on a three-month time frame, meaning that investors should anticipate volatility as it resolves to either side. Interestingly enough, open interest has surged even further since the last newsletter as traders and investors take on more risk to up-size their positions.

Following the last newsletter, short liquidations peaked over $200 million as bitcoin and a select number of altcoins (including ethereum) rallied between 10%-30%. Given the short liquidations, it’s probable that the market is turning more bullish as we speak, making things more risky for bears-turned-bulls who could be late to the party (at least from a short term perspective).

Bearing in mind that bitcoin probably won’t enter into a Euphoric stage just yet, a retracement or side-ways price-action of sorts shouldn’t surprise anyone once $10,500 is reclaimed.

At the time of writing, bulls are attempting to reclaim the $10,300 level.

Catch you next time.

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