Bitcoin Value Soars to Near Record HighJanuary 4, 2017 11:53 am
Bitcoin ended 2016 having appreciated by around 100% to $968, and now just a few days into 2017 the digital currency has continued its incredible upward trajectory and is currently trading at $1073.50, a little short of its all time peak set in November 2013 of $1,230.
Back then, of course, Bitcoin subsequently saw its value crash to just $400 and then $200 after a hacking scandal on the Bitcoin exchange, MtGoxin, in which 850,000 Bitcoins were lost at an equivalent value of $620 million. This time around, however, investors seem to believe Bitcoin is a more stable commodity, with some analysts seeing its future value reaching $1,400 or even as high as $3,000 over the next few months.
As to what is causing its astounding rise in value, it would appear that investors in countries such as China, India, and even Venezuela have been acquiring Bitcoins as a hedge against their own devaluing currencies. Nevertheless, China is the biggest player in this space, as a result of the yuan continuing its steady decline, as well as some wealthy Chinese utilizing the crypto-currency to move their money around the world in defiance of the strict government controls presently in place in their country. As Jamie Condliffe explains on technologyreview.com:
“A small band of Chinese companies have effectively gained majority control of the currency, and most Bitcoin trading occurs in the country. As domestic currency value has fallen, so demand for the digital currency has risen, driving up its value.”
Despite the euphoria, the currency has a collective value of just $16 billion, which is way too small an amount to satisfy global demand for an alternate store of wealth, thus indicating Bitcoins’ recent meteoric rise is mostly due to speculator optimism that Bitcoin will eventually gain status as an alternate, stable currency. In the meantime, as Mr. Luria of Webush Securities explains:
“I ascribe only 10 percent of the value of Bitcoin to current day usage, and more like 90 percent of it to the expectation of future usage.”