January has seen bitcoin prices climb from $6 836 (R102 313) at the beginning of the month to $9 341 (R139 804) on 31 January.
Marcus Swanepoel, CEO of Luno, comments: “Digital assets are still subject to high levels of volatility but we are seeing greater adoption, workable regulation and better access for millions of people.
“In 2020 the continued development of stable coins and the interest of companies like Facebook will accelerate the development of cryptocurrencies.”
An important event that will take place in May this year is the next bitcoin halving, which will almost guaranteed to impact the cryptocurrency’s price.
This, along with the other factors that include the take-up by institutional investors, could see 2020 becoming the year in which records are broken, according to Swanepoel.
“The last bitcoin block reward halving took place in 2016, when the reward dropped from 25 to 12,5 bitcoins. Back then cryptocurrencies were much less popular but the price still rocketed.
“Now, with more eyes on its contracting issuance rate and as supplies are limited, we’re likely to see bitcoin’s price soar again,” he believes.
The bitcoin block halving process consists in the halving of the reward bitcoin miners receive for each new block of transactions they produce. While miners currently receive 12,5 bitcoins (market value: $87 000) for adding a new block of transactions, from May onwards they’ll get a reward of 6,25 bitcoins, with the network programmatically adjusted to provide a smaller pay out.
This reduction, which occurs every 210 000 blocks, happens every four years.