” The price of bitcoin could close 2017 above $ 2000″ were the phrases of hundreds of analysts in December 2016, when bitcoin had not yet reached the $ 1000 price. Today those figures remain for the anecdote and to show that even the best analysts are wrong because this cryptocurrency has exponentially surpassed these estimates.
Last October bitcoin reached its historic peak of $ 7600 and bullish expectations continue to be reliable. However, it is normal for millions to wonder why? What is the reason for such an increase?
The market is king
As far as the price of bitcoin is concerned, the market is the one in charge. It is the supply and demand of the currency that makes it continue to increase its value more and more. We know that for many this is just a general explanation, so we will explain better what are the factors that have influenced the market in such a way that today it is possible to exceed $ 10,000 in a few months.
The world demonetization
Since bitcoin exists, hundreds of people in the world of economics have argued that it is unheard of that a currency that you cannot touch has more value than one that you can have in your hands. For this argument is worthless when it refers to a system of fiduciary currency where the “papers” issued have no referenced value in a physical asset as was gold before and the reason for the existence of these currencies, therefore, technically these currencies have no value, it is also heading towards a total demonetization where cash is no longer necessary, this could be interpreted as a problem since the cash provides freedom to its holders.
In addition, we see how cash begins to generate problems in different parts of the world. India was the first country to have a cash crisis in 2016. Consumers could not get tickets to make purchases. Venezuela is the second case, where the Venezuelan currency is trafficked on the border to increase the price of the dollar and affect the economy of the Caribbean country.
In first world countries we see how ATMs are used less and less because there are multiple methods of payment that do not require cash. It is easy to imagine a world in which you can make payments with a simple text message, as it happens in many places.
The arrival of Donald Trupm to the United States government
During the presidential campaigns in the United States, analysts from all over the world guessed correctly that the price of bitcoin would rise if Donald Trump was elected president. The Trump effect and each of its crazy decisions, such as the sanctions against PDVSA (Venezuelan oil company) with which it closed the door to acquire cheap oil, continue to generate mistrust around the world.
There is currently much uncertainty regarding what could happen to the United States economically as a result of Trump’s decisions. This explains why in this country there is an increase in the demand for assets such as gold or strong currencies such as bitcoin, increasing their value in the free market where they are traded.
The prohibition of bitcoin in China
If the market, supply and demand determine the price of bitcoin, then why was it not devalued when China forbade it? The reality is that if I experience a descent that caused it to fall below $ 5,000. What has happened is that thousands of investors worldwide saw this decline as an opportunity and bought so much during the following weeks that they made demand rise again and that therefore the price of bitcoin exceeded the value it had before the measures of the Chinese government. This is known as a tidal effect, when an asset falls and then rises above its peak before descending.
In short, analysts around the world say that bitcoin will continue to rise and can close the year beyond $ 8,000. We can only wait to see how the market behaves in the absence of just over a month to end 2017.