2017 has undoubtedly been a spectacular year for cryptocurrency. The Bitcoin price, for instance, has surged from $950 last January to reach an unprecedented $20,000 in December. This historical rise in price has surprised and thrilled speculators in equal measure. Consequently, thousands of speculators have since cashed in from the boom. However, a price crash in December, when the price of bitcoin crashed $8000 to stand at below $12,000 came as a surprise to most people. It seemed to validate growing calls from analysts that the bitcoin price surge was a bubble that could go bust sooner than later.
Despite the lull, the cryptocurrency seems to have rebounded, according to data from www.bitcoin-price.com. As of January 1 2018, the price of bitcoin was $13527.45. The question is, what does 2018 hold for bitcoin? Will the historical price spikes continue, or is a price crash around the corner?
Here are four factors that will likely impact the price of bitcoin in 2018.
4. Positive developments in the crypto currency industry
In November last year, Square announced it was integrating bitcoin in its payment system, a move that made the price of bitcoin to skyrocket. Days later, CME Group and cboe announced plans to list bitcoin futures trading. According to Ronnie Moas, an analyst from Standpoint Research Inc, the launch of bitcoin futures could increase the crypto coin’s trading volumes, consequently decreasing its volatility. If more companies integrate bitcoins in their systems, the crypto currency will soon become mainstream, and its value will most likely go up.
3. Rising transaction fees
Every bitcoin price surge comes with its problems. For instance, when the crypto coin was trading at an all-time high in December 2017, transaction fees seemed to skyrocket owing to the congested bitcoin network. BitInfoChart data show that the average transaction fee for bitcoin was $16, with highs of $30 per day at times. While most bitcoin investors see it more of a store of value than a payment system, the fact that some firms are integrating bitcoin as a method of payment shows that higher transaction fees are a growing concern for such companies. It doesn’t help that other altcoins are offering low transaction costs. And this might very well be the reason why analysts predict bitcoin prices will either go down or stagnate in 2018 as altcoins gain ground on the strength of their lower fees.
In the world of crypto currencies, liquidity is everything. And bitcoin reigns supreme on this front because it’s highly liquid. This is where the crypto currency has an edge over other altcoins. Due to this, moving between crypto currency and traditional currencies is a seamless affair. Bitcoin’s liquidity is a strength that might propel it into more success in 2018.
1. Fear of missing out
Since the beginning of 2017, bitcoin price has increased 20 fold. Most new investors have jumped into the crypto currency because of fear. They simply don’t want to miss out. The resulting frenzy has driven up the demand for bitcoins, leading to their rise in price. In November, for instance, Coinbase, the largest bitcoin exchange in the US said it had signed up 12 million customers, more than established brokerage firms. As the bitcoin gain mainstream popularity, its price will continue to soar. And 2018 might be the year when the crypto coin surpasses the $60000 mark, according to blockchain expert Dr. Julian Hosp. “The price of bitcoin can go to $60000 or $5000. The question is which comes first,” he said.
In conclusion, the future of bitcoin seems promising, but its volatility will certainly continue in 2018 because its price is not based on earnings. Predictably, the market will be as speculative as ever. Interestingly, 2018 might see massive course corrections-punctuated by short term crashes-or continued surge in bitcoin price. Or both.