Bitcoin’s price has been soaring sky high the past few months. It takes everyone by surprise how well the cryptocurrency has been doing.
On April 24th, Erik Voorhees had made a prediction of $300 billion market capitalization on Twitter: “Tokens as an asset class have surpassed $30 billion. I predict over $300 billion within 4 years.”
So, what could be the factors contributing to driving Bitcoin up to new heights?
Through estimates and statistics, it still shows that 85% of the Global Bitcoin trading comes from China. Remaining countries have had a lesser impact. Obviously, due to a large amount of data flowing in from all sides, it’s hard to keep track of the accuracy of everything.
Economists, market analysts and financial experts, like CFA Prableen Bajpaiare, report current fears in China and Asia that the yuan could deflate due to the increased investments in bitcoin.
Other analysts have agreed to this as well: “Signs indicate Bitcoin’s price has become linked to a number of macroeconomic factors in China,” said Vijay Michalik, a research analyst for digital transformation at consultancy Frost & Sullivan.
“It highlights growing concerns about yuan currency deflation, as bitcoin’s appeal has grown as an alternative asset class for a population deprived of many investment choices.”
“The most likely explanation appears to be linked to market confidence in the Asia region, with low confidence in local currencies providing a major boost to bitcoin demand,” said James Lynn, U.K. managing director at investment company Billon Group, in a 2016 CNBC interview.
There has also been a big devaluation of currencies in other emerging markets such as India and Russia. For example, the Indian Rupee had gone down by 20 percent in 2017 compared to the US Dollar.
Even if the USD is rising compared to other currencies, people around the world are still looking for alternatives to it and Bitcoin has seemed to won that competition.
In 2016, Russians were exchanging their depreciating rubles to bitcoins by a large number. Due to tumbling of the ruble, the Russian Ministry of Finance came up with statements regarding money laundering and the possibility of taxing and regulating Bitcoin as an asset. Deputy Finance Minister Alexey Moiseev told Bloomberg in an interview in April 2017. He also added that “The state needs to know who at every moment of time stands on both sides of the financial chain”.
Blockchain companies funding
Bitcoin start-ups that attracted large investments in Bitcoin and blockchain companies, with total funding of $550 million are now increasing the demand for bitcoin in 2017. This had a huge impact on the Bitcoin’s value, causing it to shoot up.
Back to China
Due to the deflation of the yuan currency, Bitcoin has been very appealing to Monetary policies, Chinese companies, and rich individuals. Also, several big investors are being tempted by Bitcoin. They are all demanding for Bitcoin in China since it is much more stable right now.
Japan, important growth
Things have started to get very interesting in Japan as well. In the last 6 months, what happened to be just 0.91 percent of the total bitcoin trading volume has surprisingly risen to 6 percent in just 30 days. Based on unofficial estimates and data provided by coinmarketcap.com and data.bitcoinity.org. There has been a sudden increase in the demand of Bitcoin in Japan.
Can anything wreck the path Bitcoin is on?
Anything, such as the increase in the price of gold would cause a drop in the value of bitcoin, but this won’t be happening anytime soon. Gold is down 4.58 percent in the last 30 days, which is in favor of Bitcoin.
Also, the altcoins have been grabbing a lot of attention the past few months, but they’re still risky and unstable investments. Whereas, Bitcoin is in a much better shape than most and will be reaching new heights in the near future.