Since reaching its peak price back on December 18th, Bitcoin has since seen its value plummet by about 50%.
In 2017, Bitcoin saw phenomenal gains. Starting out at a price of less than $1,000, Bitcoin ended the year on a on much more positive note and reached a record breaking price of $20,000.
However, since then, prices continue to fluctuate wildly. Making it difficult for anyone to make predictions about the future of Bitcoin.
A Limit of 21 Million Bitcoin Token
Bitcoin has reached such an impressive market cap mainly because it meets two important economic expectations: rarity and usefulness.
Typically, the value of a good will increase as its reserves begin to dry up. And, contrary to what people think, Bitcoin is not an unlimited resource. Bitcoin’s creator, Satoshi Nakamoto, has limited the number of Bitcoin tokens to 21 million, and as of today, about 80% has already been mined.
Now, with only 20% remaining, analysts are saying that Bitcoin will soon become a rare currency, making it more valuable than other assets.
Although Bitcoin has taken a massive hit since it reached its peak, its value currently oscillates in between $10,000 and $12,000. Still, experts are saying that it’s an investment opportunity that is not to be missed. Many believe that Bitcoin could reach new highs in 2018. Some even believe that we could see prices go as high as $40,000 by the end of the year.
A Useful Resource
Rarity alone is not enough to give an object value, it must also have a useful function. We can safely say that Bitcoin is useful in the fact that it’s a much more efficient currency that others such as gold. Also, being a decentralized currency, it has the advantage of being protected against changes in national economic policies. In other words, neither banks or governments can fully control it and it runs virtually no risk of collapsing. And, with this, Bitcoin is also immune to inflation.
The intrinsic features of the cryptocurrency also make it very attractive to public investors. Thanks to its open-source architecture, every one of the network’s users can audit and improve their own source codes. The network is constantly audited, which helps to make it an even more reliable system. This ensures that no fake Bitcoins can make their way into circulation. Also, Bitcoin has the advantage of being easily divisible.
Bitcoin’s value comes from the fact that traders and cryptographers around the world seem very interested in it and believe in it as a form of investment. If people continue to accept this new currency, there is no reason why it will not continue to be useful and valuable. Conversely, if Bitcoin continues to become more and more rare, its value will continue to appreciate.
Still, Bitcoins days seem to be numbered. Many veteran traders are beginning to turn their backs on Bitcoin and are looking to other, more innovative cryptocurrencies like Ethereum, Cardano or the Monero. For now, the only thing we can do is wait to see if this trend will continue.
A Possible Crash
Bitcoin is supported by newer investors who choose it as their initial investment because of its recent dominance in the media and its impressive market cap. Another major support is that it is often used as a reference point to start acquiring other cryptocurrencies.
However, if Bitcoin continues to lose investors in favor of Ethereum, Cardano or the Monero, it will also continue to lose value.
Are the days of the glorious Bitcoin numbered?
According to Julian Hosp, CEO of Ten-X, we could see Bitcoin crash as low as $6,000 by the end of 2018. A rather pessimistic prediction that is not shared very widely amongst the community.