Following an expected December rally, bitcoin surpassed the $1000 mark and flirted with reaching its all-time high. With a plethora of industry experts calling for a price to stabilize between 2 and $3,000 dollars, it is very hard to give differing predictions for movements in bitcoin. However, consider the following:
1. Bitcoin’s volatility problem will likely continue and we recently experienced it in a 20% price collapse:
The value of digital currency bitcoin crashed on Thursday, falling by more than a fifth just as it appeared to be at an all-time high.
The price of one bitcoin abruptly fell from $1,161 (£942) to $889 before it stabilised at around $950.
The crash came after the virtual currency passed the all-time closing high as recorded by Bloomberg, although different exchanges have recorded different figures for the record level. – The Telegraph
2. Trump will “Make America Great Again”:
An agenda that will likely signify the reversal of many progressive legacies and bring us closer and closer to the politics of the 80s and 60s. A stronger dollar might call for less speculation in Bitcoin but, with Peter Thiel by Trump’s side, don’t be surprised to see true bitcoin innovation by the very government that so hardly attacked it.
3. Strong international demand for bitcoin:
Demand for Bitcoin as a currency is also likely to continue to grow in 2017, again as China has promised to restrict capital outflows and to devalue its currency in order to protect exporters. Another large economy that has seen increased demand for Bitcoin is India, whose government surprised many by scrapping large-denomination banknotes and causing a panic for cash in the country of more than a billion residents. A rising U.S. dollar has also caused some in emerging markets to seek alternatives to fiat currencies as debt denominated in dollars becomes more expensive to service. (For more, see: Bitcoin Prices in India Soar Amid Demonetization Drive) – Source: Bitcoin Predictions for 2017 | Investopedia
4. Updates and increased scarcity:
As the reward for mining decreases, bitcoins becomes scarcer and scarcer. This creates the exponential effect of supply tightening because investors become more conservative as time goes by and volatility is consequently reduced over time (as a percentage of the currency’s value). Updates in the Bitcoin protocol have also made the currency less susceptible to attacks of several sorts.
5. My two cents:
I don’t have a clue. Be extra careful with your investments on bitcoin and cryptocurrency in general for this year. Diversify, save, be cautious and remember the old days, because I think we’re going back to them. Thanks for reading and, to the moon!