The following is the all-encompassing Bitcoin price prediction for both near- and long-term future.
Bitcoin (BTC) is a mineable coin that is currently traded at $44 194.78 per unit, with the market capitalization of $864 662 582 104 that makes it a top-ranked cryptocurrency.
Digital assets like Bitcoin have already become the focal point of attention not only for retail investors and speculators, but also for large institutional investors who perceive Bitcoin and the rest of cryptocurrencies as an effective hedge against inflation that takes a heavy toll on the global economy.
Therefore, having at least a part of the portfolio devoted to crypto is practically a must for any trader and investor who wants to grow his wealth over the coming decade. But with it comes the necessity to closely follow the developments on the said market in order to comprehend the current situation and have some sense of the future. This Bitcoin price prediction model was created for the purpose of helping the reader to navigate through the rapidly-evolving crypto space, find the best coins or tokens to invest in, and keep the equity curve growing. But before delving into the all-around Bitcoin analysis and price prediction, we would like to remind you of the essential rules of cryptocurrency trading and investment.
- Even though cryptocurrencies have proven to have a much larger return on investment (ROI) than traditional tradable assets - the numbers sometimes reach hundreds of percentage points - they remain inherently much more volatile than traditional markets, with price fluctuations in a single weekly and even daily trading sessions amounting to 10% - 30%. This puts an enormous emotional strain even on experienced investors and traders, especially during times of market downturns.
- Sometimes, cryptocurrency markets could start moving randomly and erratically, falling out of the scope of our short-term prediction model due to various reasons, such as the introduction of new regulations or bans. However, it shouldn’t be the reason to indulge in a panic since it’s mostly the sign of maturation, while our mid-term and especially long-term forecasts play out almost to perfection.
- Risk management is key when it comes to cryptocurrency markets, especially at the stage when you begin to build the position. Stop losses, position-sizing, and market timing should never be ignored, especially when there is no distinguishable trend.
With that being said, let’s focus on the Bitcoin market, its current standings, as well as the mid-term and long-term price prediction that is based on the readings of our proprietary Crypto Volatility Index (CVIX). At this point, the price of Bitcoin stands at $44 194.78, and this particular digital asset holds the 1st position in the global cryptocurrency ranking. For your information, the ranking of every cryptocurrency is heavily reliant on its current market capitalization and price, and is calculated by multiplying these two variables, something that our system constantly does in order to supply you with the most up-to-date information on the asset in question. Also, in order to get a better grasp of the market situation and understand the general direction of the trend, or to register its absence, it’s also important to analyze the historical price data relevant to the market under review.
- Yesterday, on December 8, the price of Bitcoin stood at $43 269.87 at the close of the daily trading session, which constitutes a 1.91% difference as compared to the current price;
- A week ago, on December 2, the Bitcoin market stood at $38 688.39 as the result of the efforts of all market participants. As the result, the price shifted by 0% in relation to its present standing;
- A month ago, on November 9, Bitcoin was priced at $35 693.82, which coincided with our price prediction for that particular period. Compared to the present position of Bitcoin, it represents a 23.82% price move.
These figures should yield you some insight into the current market structure, whereas our in-depth price forecast is based on the showings of CVIX. But in order to understand the overall potential of Bitcoin, or any other cryptocurrency for that matter, it’s important to take into account not only the price fluctuations but also changes in the market capitalization of the said digital asset.
If you are familiar with the stock market, then you probably know that market capitalization reflects the market value of publicly traded shares of a given company. The same concept applies to cryptocurrency markets: here, market capitalization represents the mathematical approach towards determining the value of cryptocurrency; in our case, it's Bitcoin. In traditional markets, market capitalization indicates the total dollar value of the company and allows one to comprehend the relationship between the size of the company that issued the stock, which constitutes the major difference with regard to cryptocurrencies, as well as the return potential of that particular stock, and the scope of associated risks.
When it comes to cryptocurrencies, market capitalization serves more as an indicator of the coin's share, or dominance, in comparison to the rest of the market, along with its overall popularity with the global crypto community and investors. Many cryptocurrency traders view market capitalization as a key indicator to be considered before making trading decisions. It is calculated by multiplying the total number of coins that are currently in circulation (circulating supply) by the current price of Bitcoin, which, as already mentioned, presently stands at $44 194.78. Taking that formula into account, we have calculated the current market capitalization of Bitcoin to be at $864 662 582 104, which justifies its place as the 1st coin among those present on the cryptocurrency market.
- Yesterday, on December 8, the market capitalization of Bitcoin stood at $846 516 796 631;
- Last week, on December 2, the total amount of capital devoted to Bitcoin was established at $756 682 949 868;
- The data from a month ago, registered on November 9, shows that Bitcoin had a market capitalization of $697 348 451 766.
Then again, while the market capitalization of Bitcoin serves as a relatively clear indication of the size and the performance of the reviewed cryptocurrency, it might not be the proof that the trading volume on that market is generated in sufficient quantity - as will be explained later, the volume could be crucial when determining the potential direction of the market and the strength of the anticipated price movement in either direction. The market capitalization in the instance of a digital asset could be influenced by the number of active transactions within the corresponding blockchain network. A large number of transactions of any given day could potentially pump up the price considerably, which would result in an instantaneous boost in the market capitalization of the underlying asset, regardless of whether or not there have been positive changes in the project's fundamentals. Media hype is also the factor that could exert a tangible impact on the situational pricing of a cryptocurrency and even lead to the explosive but unsubstantiated bullish rally that more often than not ends with a cascading price dump, whereas the market capitalization would always follow the price action. Therefore, don't make a judgment regarding a coin's potential purely on the basis of its present market capitalization and always study the historical data related to this metric.
There are three types of cryptocurrencies in relation to their market capitalization:
- Large-cap
- Large-cap cryptocurrencies boast a market capitalization of over $10 billion over an extended period of time, with a tendency towards growth. They are generally considered to be the lower-risk assets and the most popular ones, mainly because these markets possess high liquidity and are capable of withstanding an elevated selling pressure, meaning that it would take an enormous amount of money to force the double-digit price drop. On the flip side, the large-cap crypto also has significantly less potential to make 10X or 100X gains for that same reason.
- Mid-cap
- Mid-cap cryptocurrencies are generally characterized by having a market capitalization between $1 billion and $10 billion. This group of coins represents the silver lining to the entire cryptocurrency market and are medium-risk because some of them have enough untapped potential to have a ten-fold or even greater price appreciation, though investing in these coins entails elevated risks since they tend to be more volatile.
- Small-cap
- Small-cap coins have a market capitalization that doesn't exceed $1 billion. Obviously, these cryptocurrencies represent the high-risk division of this asset class due to being prone to dramatic and largely unpredictable price swings as it takes a relatively small amount of capital to push the price in the necessary direction, hence carry out a market manipulation. Some of these coins are real gems that later go 1000X to the upside, though finding them is a really daunting task, while the majority forever remains on the fringes of the cryptocurrency market.
Judging from the market capitalization numbers provided above, Bitcoin is a large-cap cryptocurrency and belongs to a lower-risk category. But the decision regarding whether or not to have Bitcoin in your portfolio should depend on your investment goals and risk tolerance.
As explained above, coin supply is a key variable for determining the market capitalization of a cryptocurrency and its overall investment potential. However, it’s important to understand the difference between the following three types of supply: the circulating supply, the total supply, and the maximum supply.
- As its name suggests, maximum supply refers to the ceiling amount of coins that will ever be mined or minted within the corresponding blockchain network. Once that amount is obtained, the system stops the generation of new coins for good. The maximum supply is usually indicated in the source code of the underlying protocol as well as the whitepaper. The countdown towards the maximum supply usually starts with the formation of the first (genesis) block on the blockchain. In our instance, Bitcoin has a maximum supply of 21 000 000 coins. This particular feature of a certain coin can be considered as a hedge against inflation because the predetermined issuance rate combined with the supply ceiling often renders the coin deflationary once the maximum supply is reached and creates a pre-programmed scarcity of a given asset which creates the conditions for a more predictable and steady price appreciation.
- Total supply points to the number of coins that have already been mined, minted, or otherwise created and are either circulating on the market or locked in developers’ or holders’ cold wallets. The total supply also takes into account any coins that have been burned (put out of circulation) for the purpose of maintaining a healthy inflation rate. It can be compared to the number of outstanding shares of a company that is publicly traded on the stock market. The total supply of Bitcoin currently stands at 19 564 812 BTC.
- As already explained, the circulating supply is the most commonly used metric for determining a market capitalization of a cryptocurrency in question. It corresponds with the best approximation of the overall number of coins that are publicly traded on cryptocurrency exchanges and contribute to their liquidity. Their volume doesn’t include the coins that are vested, staked in smart contracts, locked in digital wallets, or put out of circulation. The circulating supply is basically the equivalent of the floating supply of shares in the stock market. Right now, the circulating supply of Bitcoin is estimated at 19 564 812 BTC.
As you can see, understanding and taking into account the differences between the maximum, the total, and the circulating supply is crucial for determining the overall investment potential of the coin and the possibility of it becoming a deflationary digital asset that could translate to better and more sustainable gains in the long run, as well as whether or not the coin in question could be considered as a hedge against the soaring inflation that can create another spiral of the global financial recession.
Trading volume is basically the metric that determines at what pace the coins are changing hands between buyers and sellers on a given cryptocurrency exchange over a certain period of time. High trading volume is often associated with fairer pricing of the cryptocurrency in question and significantly reduces the chance of that pricing being distorted by market manipulators or other illicit actors.
Even though the trading volume isn’t particularly useful for making long-term Bitcoin forecasts, it’s of utmost importance for determining the validity of short-term and sometimes mid-term price fluctuations as it helps to assess the strength of the move when the price breaks out of a consolidation zone or the potency of the forming trend, whether it’s an uptrend or a downtrend. The rule of thumb for the potential of a price move is quite simple: in case the price volatility goes hand in hand with high trading volume, the move has a higher probability of coming to fruition, or the trend has a higher probability of continuation. Conversely, if the price action occurs on the backdrop of low trading volume, it’s likely to fail or result in the bullish or the bearish trap, which is the situation when the price reverses sharply after momentarily breaking a certain price level. And since the Bitcoin market is inherently highly volatile and significant price spikes or drops occur quite frequently, trading volume is one of the few effective tools for determining their sustainability. Therefore, it’s very important to establish the correlation between incoming trading volume on the Bitcoin market with the showings of the Crypto Volatility Index in order to avoid being caught up in fake moves.
Additionally, the reading of trading volume can help one determine better entry and exit points because according to the rules of technical analysis, significant price moves, trend reversals, or consolidations often occur at the price levels that are accompanied by historically high volume since those are the volumes where “big money” had come into play. According to our data, the trading volume on the Bitcoin market was as follows:
- Over the past 24 hours, the trading volume associated with the Bitcoin market amounted to $23 723 608 036.
- Yesterday, on December 8, the average volume at the close of the trading session amounted to $27 630 150 649.
- A week ago, on December 2, the intensity of Bitcoin trading throughout the session reached $23 511 374 125.
This data, and the occurrences on the Bitcoin chart, can help you assess for yourselves the present situation on the market and the prospects of the price heading in the current direction or making a reversal.
As already mentioned, the Crypto Volatility Index (CVIX) is our primary instrument for making the most accurate predictions regarding the price of Bitcoin in 1 to 5 years' time. It was created by the in-house team of developers and market analysts and was used to test a variety of profitable trading and investment strategies.
Key facts
- CVIX was created on the foundation of the Market Volatility Index (VIX) that was first introduced on the Chicago Board Options Exchange (CBOE) to assess the volatility of the stock market, particularly the S&P 500 index, and facilitate the development of improved risk management strategies;
- The Indicator is used to gauge the overall market sentiment and the expected volatility within the context of a shorter and a longer time span;
- In addition, CVIX incorporates artificial intelligence algorithms to gather and analyzes all of the aforementioned market data for more accurate and all-encompassing price predictions;
- CVIX displays three types of expected market volatility and translates it to numerical values from 1 to 99. For ease of reference, the volatility readings are divided into three categories: red (99 to 61) - high to very high volatility, yellow (60 – 31) - medium to medium-high volatility, and green (30 – 1) - low to very low volatility;
- When CVIX shows red, the expected volatility and the risks are extremely high, which means that the market is gearing up for significant price fluctuations. Meticulous risk management is a must at this point. Always trade Bitcoin with fixed stop losses, reduce the position size if possible, keep your emotions in check, and balance risk and reward;
- The yellow coloring of CVIX indicates that the anticipated volatility is mild and the noticeable price movements are to be expected, but they are unlikely to disrupt the formed market structure. In that case, you can trade Bitcoin with a larger position size and place stop losses a bit closer to support/resistance levels, and opt for a higher reward to risk ratio;
- When CVIX is green, it means that the market sentiment is least fearful, and the expected market volatility is at its lowest. The green CVIX usually marks the periods of consolidation and relative calmness that can be utilized to take the largest position in the Bitcoin market. In this scenario, you can even trade with a mental stop loss, utilize larger positions, but don’t set the risk/reward ratio higher than 1:1.
Having taken the reading of the Crypto Volatility Index into account, along with the results on in-depth technical and fundamental analysis, we have compiled the following short and mid-term Bitcoin price forecast:
