Bitcoin and other cryptocurrencies are now being acknowledged around the world. Bitcoin is the first digital currency that was developed by some unknown Japanese group in 2009. The first set of bitcoins was worth $0.00. It was literally worthless that no trade was ever done in 2009. During 2010, the highest price of 1 bitcoin (BTC) was just equivalent to $0.39. It took 2 years for bitcoin to hit $1.00 per 1 BTC.
But over the years, large companies and businesses started accepting and investing in bitcoin because of its usefulness in terms of trading. Last year, the highest recorded price for 1 BTC was $19,343.00. As of this moment, 1 BTC is equivalent to $13,531.00, and it dynamically changes as seconds go by.
Factors and Events that affect BTC Price
People are now wondering if it’s still worth investing in bitcoin since there’s no guarantee of profit out of it. The value of bitcoin is not controlled by a government or any larger establishment although it’s heavily affected by different factors. Predicting the price of bitcoin in 2018 will depend on the worldwide events that are connected to cryptocurrency.
Every official statement of a government regarding cryptocurrencies affects the price of bitcoin. For example, discussions about adopting bitcoin as a new currency will surely increase the price of bitcoin. This scenario happened during the Cyprus bank crisis in March 2013 where investors became afraid of losing profit and started investing in bitcoin.
This action increased the price of 1 BTC from $48.00 to $75.0. On the other hand, government decisions such as restriction and banishment of bitcoin anonymity decrease the value of BTC. On December 2013, China prohibited financial institutions from utilizing bitcoin which decreased the value from $1022.00 to $834.00.
Bitcoin is considered as an economic bubble because it only receives value when it’s converted into a conventional currency like US Dollar. The number of companies that accept cryptocurrency for transaction increases the value of bitcoin.
WordPress started accepting bitcoin transactions way back 2012, and this attracted more people to mine and invest in bitcoins. After the next 2 years, larger companies like Dell, Microsoft, and Steam also allowed product purchase using bitcoins.
Large companies and cryptocurrency investors try to manipulate the value of bitcoin in several ways. Some would sell lots of bitcoins lower than the average market price. This act will cause panic to small investors thinking that the value of bitcoin will crash, and in response, they will also sell their bitcoins for a lower price. The bitcoins from the small investors will now be purchased by those large companies and gain profit from it. Furthermore, they will increase the value of bitcoins higher than the average market price.
Worldwide news and social media updates also affect the price of bitcoin. News such as new mining software or approvals of cryptocurrencies tends to increase the price of bitcoin. Positive reviews and milestones that are reported online bring popularity to bitcoin. A lot of people got interested when bitcoin reached 1 BTC per dollar. 5 months after the news, the value of bitcoin went to $20.00. On the contrary, negative news like bitcoin scam, money laundering or cryptocurrency hacks results in the decline of bitcoin value.
Supply and Demand
The number of bitcoins in circulation is set to a maximum of 21 Million. Last January 12, 2018, over 16,799,400 bitcoins are already mined. Due to the controlled supply, there will be an expected increase of bitcoin value when it reaches the maximum capacity since it will not be acquired through mining anymore.
Although there are about 16.7 million bitcoins mined, only about 12 million bitcoins are in circulation. It’s because the bitcoin’s creator, Satoshi Nakamoto, holds about 1 million bitcoins. Other major bitcoin holders also choose to keep bitcoins in their possession. This behavior increases the demand for bitcoins and therefore increases its value over time.
As of January 2018, the price of bitcoins is still increasing. This will continue to rise if certain events happen such as:
- Legalization of bitcoin transaction in different countries such as what happened in Japan in 2017 when the government finally recognized bitcoin exchanges.
- Acceptance of bitcoin as a payment currency in stores
- Hoarding of bitcoins by major holders (thereby decreasing the supply and increasing the demand)
But a decline in value or even total crash of bitcoin is also possible in 2018 if:
- Bitcoin holders begin dumping their coins on the market
- Large companies reject bitcoin (thus bursting the so-called economic bubble)
- Prominent hacks and scams appeared
Predicting the price of bitcoin in 2018 will not be tricky so long as enthusiasts are updated in the latest happenings about bitcoin. As for now, there are speculations that central banks are pressured to hold bitcoins as part of their reserves. Amazon and a Ukrainian shipping company are also planning to accept bitcoin payments this year. These events are good indicators that the bitcoin value will increase during this year and can even jumpstart the transformation of bitcoin into a global reserve currency.