The price of Bitcoin reached its peak last December but with the beginning of 2018, it started a deep downturn and the price has been decreasing through out 2018. This declination in the value has caused a lot of speculations relating to the end of bitcoin.
However the beginning of 2019 started the hope in many crypto and Bitcoin enthusiasts. Currently, The price of Bitcoin has extended $10,000 mark in 22nd June and is hovering around it. This is the first high ever since 2017 whereby the Bitcoin was priced at $20,000.
Through this article, we are trying to analyze the possible reasons why the price of Bitcoin will further increase.
1. Historical Evidence
Since, its foundation in 2008, Bitcoin has faced numerous crashes and price depreciation, but most importantly, it has always found a way to recover from every challenge. For instance, after every major crash, Bitcoin recovers even strongly leading to the ultimate price hike.
Though factors such as greed, speculation and the urge for quick profits, played a vital role in the price declination, the price will eventually increase for sure.
2. Supply and Demand
The modern economy is fundamentally based on the Supply and Demand which also have dramatic impacts on one another. If demand exceeds supply, the price rises whereas if supply is greater than the demand, the price drops. This is the basic principle of every market and Bitcoin is no odd in this scenario as well.
As for Supply, Bitcoin’s supply is limited. This limitation was set by Nakamoto during the creation of Bitcoin, according to whom, the maximum supply of Bitcoin is only 21 million. Once 21 million bitcoins are mined, new coins can no longer enter the circulation. This contradicts the national currencies which generally increases the supply every year.
This finite nature of Bitcoin will certainly lead to an increase in demand of the Bitcoin.
3. Dominant in the cryptocurrency market
There are thousands of cryptocurrencies available today and the number is growing. Though altcoins have been gaining a lot of popularity in the crypto market, none of them has been able to beat the hype of Bitcoin. After all, it started the cryptocurrency era and is ruling since then.
This unbeatable nature of Bitcoin will certainly help in gaining popularity and ultimately create the price hike.
4. WideSpread Adoption
Bitcoin is massively used all over the world. There are countless tools that have been created for the Bitcoin ecosystem by many companies. Tons of money has been poured by Venture Capitalists for building products that could be used by non-technical consumers as well. There are different services and apps available for enabling end user to engage with the bitcoin technology. This adoption rate of Bitcoin has increased rapidly and is now beyond control. Thus, replacing this existing ecosystem will be more difficult.
Initially, Bitcoin could handle only six or seven transactions per second, but with the upgrade to Segregated Witness protocol, it now handles 12 to 14 transactions per second. This is still very less if compared with credit cards that can handle thousands of transactions per second. The ever growing transaction of Bitcoin has been receiving a lot of criticism due to this inability.
The solution proposed by the Lighting network promises to solve the scalability problems. By the implementation of payment channels between network participants in Lighting network, Bitcoin is expected to handle millions or even billions of transactions per second. This could be the reason for bitcoin to surge this year.
Therefore, Bitcoin is just not another currency, its value can be compared with gold or other forms of cash. This is in fact just the beginning of revolution and modernization of currency. With the increasing craze in Bitcoin and the cryptocurrency, the price of Bitcoin is not going to be zero any time soon. After all, if we look back five years, Bitcoin was worth only $0.30 USD cents. Despite the fluctuations in the price in the past, the overall price of Bitcoin has grown tremendously and this trend is sure to follow in the upcoming days.
Although Bitcoin's current value is gaining the attention of cryptocurrency enthusiasts, many believe this digital currency still has a long way to go.