Bitcoin price topped the $1000 mark for the second time this year after a very topsy-turvy January. This instability was largely due to the Chinese government regulations of bitcoin exchange firms in the country. However with the Chinese debacle seemingly behind us now, a more positive trend is expected in the coming months.
According to several bitcoin and cryptocurrency experts , the price of bitcoin will soar this year despite negative drawback potentials such as the regulatory policies as mentioned above and scalability issues. Vinny Lingham CEO of Civic, a Bitcoin startup predicts price above $3000 in 2017 while Barry Silbert, CEO of Digital Currency Group (DCG) without mentioning figures forecasts higher prices this year.
Expect 2017 to be a very good year for Bitcoin’s price – Barry Silbert
The accurate prediction of bitcoin price for 2017 hinges on several key factors amongst which are
Generally governed by a rule of thumb, an upward trend in volume of Bitcoin traded is followed by a positive rise in bitcoin value and similarly a downward trend results in price depreciation. However at stable Bitcoin price with an increasing volume, there is mostly a high level of certainty for increase in price to follow.
This volume plus price chart by Bitcoinity.org is a six month representation of the relationship between traded volume and price. It is easily observed that upward change in volume traded is accompanied by corresponding climb in bitcoin price and vice versa.
Government Regulation & Interference
There is a general consensus that governments essentially subsidize the usefulness of Bitcoin and the Bitcoin price through their various regulations.
Several instances of price fluctuations as a result of government involvement in bitcoin affairs, the recent Chinese government clamp down on bitcoin exchanges in the country as a case-in point strengths the effect of government regulations on the price prediction.
Bitcoin Core developer Peter Todd had this to say when asked about the effect of government intervention in bitcoin and blockchain technology at a Bitcoin Uncensored event.
While there may be some use cases of bitcoin that don’t involve getting around government regulations, it’s clear that these government-avoiding use cases are what propelled Bitcoin to what it is today.
It can be recalled that popularity of Bitcoin skyrocketed due to Silk Road – an anonymous online marketplace for goods tagged as contraband by several governments worldwide and the financial blockade on the whistle blower entity – Wikileaks.
In light of the above instances, bitcoin price swing in 2017 will not be devoid of government interference as well.
Bitcoin Mining Dififculty
Typically Miners earn revenue two ways. One is through block reward – which is a mechanism through which new bitcoins are created and the other way is transactions fees for individual transaction confirmation on the network. This reward is about 12.5BTC approximately every 10 minutes. However to sustain and regulate the rate at which blocks are confirmed and by extension bitcoin price inflation, the creators, Satoshi Nakamoto introduced a rule that updates the network difficulty every 2016 blocks, or approximately two weeks. You can read more on Bitcoin Mining here.
This Mining difficulty has a direct effect on the price of bitcoin. As the difficulty to confirm blocks increases less bitcoin is produced and as such price increases –Supply versus Price. The chart below shows a two year difficulty trend. In that time the price of bitcoin rose by over 480%.
Global Adoption and Awareness
As bitcoin gains popularity worldwide, it becomes almost certain that the demand for it will increase leading to a corresponding upward swing in price. Currently bitcoin is being dubbed as the “Digital gold” and will find many more application and penetration in new areas in 2017. It is already serving as a store value in some economies where currency fluctuation is a major problem.
What are your thoughts on the price of Bitcoin for 2017. See you in the comments.
I have been in the Cryptocurrency ecosystem for about three years. My passion for this niche of financial tech space inspires me to share with you all I can in the world of Cryptocurrency, Blockchain and financial technology.