What to expect of the world’s most famous cryptocurrency in 2018? Will its price continue to rise or should we expect a bubble burst?
On January 1st 2017, Bitcoin value was $997. Over the following months, its value steadily increased, reaching $5,000 somewhere mid-October. After that, the price went through the roof: on November 29th the value of a single Bitcoin broke $10K; on December 7th it reached well over $16,000; only ten days later, on December 16th, Bitcoin value peaked at $19,343. However, in just a fortnight, this currency lost almost third of its worth: on the new year’s eve, you could purchase a single Bitcoin for just over $13,500.
And in 2018, the declining trend thus far remains. Apart from price-spike on January 6th and 7th, at which point Bitcoin’s price was $17,000, value has been going down steadily, reaching $11,000 late January.
Taking all of this into consideration, what can we expect in 2018?
It is tough to say. Last year taught us is that Bitcoin tends to “not follow anticipated trends”, thus making any attempt at using technical analysis to predict prices for 2018 simply irrelevant. However, there is rate of adoption, technological advances, as well as regulations to consider when discussing possible trends of 2018.
The price will fluctuate, but ultimately rise
The roller-coaster of price fluctuations will continue. According to Ari Paul, chief investment officer of cryptocurrency investment firm BlockTower Capital, it is highly likely that bitcoin will trade at both $4,000 and $30,000 at some point in 2018. Similarly, Tom Lee of Fundstrat Global Advisors believes that Bitcoin will realistically reach $20.000 price margin.
Why such confidence? Well, there are several reasons why analysts think Bitcoin will continue to rise:
Investors will bet on the payout from cryptocurrency splits. Every time the Bitcoin developer decides to make own upgrades to the Bitcoin network, investors will receive an equal amount of the split-off coins. All they have to do then is opt for the coin they want to continue with, and sell the rest.
The number of daily Bitcoin transactions steadily increases, and it has outpaced the currency price hike by a factor of 100. In other words, if Bitcoin’s value increased 50 times during 2017, the number of trades increased 5000 times.
The number of industries and businesses that accept Bitcoin is increasing day in and day out. You can buy food, furnish the house, travel the world, or even play an online game using Bitcoin. If it’s utilised time and again, the currency will not diminish in value.
Bitcoin may become a means of storing value
Having in mind Bitcoin’s security features, and the fact investors started using it as a vehicle for their investment, it’s not entirely impossible to witness the Bitcoin’s transformation from a transactional currency to a tool used to store value.
Speaking for CNBC’s Future Now, co-founder and head of research at Fundstrat Global Advisors Tom Lee, said that this cryptocurrency could take a market share from gold in the near future, increasing its value in the process:
“On a long-term basis, the easiest way to look at Bitcoin is as a replacement or a store of value. So as millennials discover and generate income, they’re going to use it as a replacement for gold. If it gets 5 percent of the gold market, that’s roughly $50,000, and we think that in 2018 we would be part way there and that is why we anticipate [Bitcoin price to be] $20,000.”
Just to be clear: it is highly unlikely that Bitcoin will replace gold as a mean of storing value in 2018.
Additional regulations may be in order
Even though cryptocurrencies are decentralised and “immune” to direct manipulation, governments of the world have the power to regulate their usage indirectly. For instance, in September 2017, China banned all coin exchanges within its borders causing Bitcoin price to plummet. Even though the “crypto-king” bounced back within days, a valuable lesson was learned: if your government decides to intervene, the price will be affected – one way or the other.
For example, if governments of the world decide to ban companies from accepting cryptocurrencies as a mean of payment, or from importing blockchain technology, Bitcoin (and similar currencies) will become inaccessible, thus losing utility as well as the value in the process.
Bitcoin is considered to be the global currency. Still, few governments can have a meaningful impact on its value. It boils down to countries with strong economies like America, Russia, China, Japan and EU which, independently, may have some influence. However, if they ever decide to take cryptocurrencies down once and for all, a joint effort will be required.
Will the “crypto-king” prove to be a bubble?
Depends on who you ask: If you turn to banks or suits of Wall Street, then definitely yes. As a matter of fact, many authors have pointed out that Bitcoin price fluctuation remarkably resembles Stages of Bubble graph, which only emphasizes the possibility of “market crash” in the near future. So, if you decide to go all in, have a contingency plan.
However, there is one thing we mustn’t forget: Bitcoin wasn’t created to enable quick and easy money; it was invented as a way to level the banking playing field. Even when it loses its astronomical value, “crypto-king” will still serve its purpose.
Tyler Stavola is an SEO Practitioner, Digital Strategist, and experienced Digital Director at OWDT with a demonstrated history of working in the marketing and advertising industry.