“Bitcoin’s a bubble” “Bitcoin’s the future” – It’s hard to see through the noise.
In this article, I look at the price of Bitcoin in context.
I look at some signs that might affect the price.
PRICE: Bitcoin is about $11,500. What does that mean?
Over 2017, Bitcoin’s price went 20x to its peak of almost $20,000. This is a significant increase and has led to many speculators saying it is a bubble. On the other hand, believers are hoping for prices of up to $100,000 by the end of 2018.
Over the past, whenever it goes up by a significant amount, it usually comes back down about 40-60%. This happened early this year when it came down to a low of $6000. It has since bounced back to its current value of $11,500. Typically, after the correction has finished, Bitcoin rises until the next correction. (Obviously, this won’t go on forever).
Where is it likely to go?
A very difficult question that in short, nobody knowns. However there are some elements to consider:
1. Technical Analysis uses chart patterns to predict price movement. You can find TA for free here. Current opinion is that it has completed an ‘inverse head and shoulders’ pattern which is a sign that it will go up. [Bullish – which means good]
2. If you look at Bitcoin:USD on the log chart, which enables you to look at each rise and fall in context, you can see that there is quite a clear upwards direction. TradingView offers free charting. [Bullish]
3. Like anything successful, competition always comes to the market. Other currencies are called AltCoins. These have been decreasing Bitcoin’s market share over time. Some are holding out for the flippening, where Ethereum would overtake Bitcoin in market share. This is not necessarily bad for Bitcoin because people buy AltCoins with their Bitcoin and this inflates its value. However, in the long term there will be increased AltCoin to USD pairings and Bitcoin might lose out to better technology. [Bearish – which means bad]
4. While price affects the news, the news also affects the price. Positive news includes major organisations partnering up with cryptocurrencies, for example Ethereum. However, news of South Korea restricting anonymous crypto trading which was reported as a clampdown on all trading came out as Bitcoin fell from $20,000. In 2018, it is likely that there will be a lot of governments starting to regulate cryptocurrencies. Even though regulation is probably a good thing for bringing crypto into the mainstream, it’s likely the news will negatively affect the price. [Bearish]
5. Bitcoin has managed to solve its scalability issues, for now. It had issues in December where its fees hit levels that made it unusable as a currency and promoted a new view of it as a store of value. Segwit is a way of temporarily expanding the block size to allow for more transactions to happen per block. This is being used for about 30% of all transactions and may have helped in the decrease of waiting transactions. There are plans to implement a ‘lightning network’ which eases congestion by taking the transactions off-chain. [Bullish]
IN SHORT: There are strong bullish signs for bitcoin in the next few months to a year. However, there is strong competition from a huge number of AltCoins that claim to have better, faster or more private technology. Most investors will have a large portion of their holdings in Bitcoin and Ethereum but if the currencies don’t adapt, they may find themselves falling behind in the race.
Article written by Tim Copeland
None of this is financial advice. I take no responsibility for any decisions you may make.
Disclaimer: I own various cryptocurrencies that may include the topic of the article. My main holdings are in XRP, DGB, NANO.
To exchange for Ripple (XRP), NEO (NEO) or Litecoin (LTC), sign up to Binance.
If this post has informed you or helped in any way, feel free to donate ETH to 0x8c854F441248936BD12EB32373bb16Aa99129483