Why the price of bitcoin is crazy these days and what can be predicted in near future?

Not less than a month ago, did Bitcoin’s price reach an all-time high, crossing $40,000, after crossing $20,000 for the first time in December. 

Cryptocurrencies, especially Bitcoin, are highly uncertain and unpredictable in nature (for the right reasons); given that we’ve witnessed too many bubbles in the past. One such bubble was formed in 2017: The 2017 Bitcoin Rush. Bitcoin’s value had reached its highest point in January 2017 when it hit $19,498.63. At that time, Bitcoin was the talk of the town. And this ‘hype’ caused Bitcoin’s price to increase further. News reporters and financial analysts all made their Bitcoin predictions – which made the public interested. More and more people were trying to buy Bitcoin and so the price increased. Soon after, the price crashed to below $10,000. 

Source: BitDegree
Source: BitDegree

Moreover, if we look at the price history for Bitcoin for the past three months, we can see that the price had increased to as much as three times than what it was in November (refer to the Graph below). A month in the cryptocurrency market is, as my boss likes to say, equivalent to a year in the Stock market. This is the extent of volatility this market experiences!

Source: Coindesk
Source: Coindesk

So, this brings us to the most asked question: Why the price of Bitcoin is crazy these days, and what can be predicted in near future? 

Well, the recent increase in price has been much more than just another bubble. There are many reasons behind the price rise: 

  1. Increasing demand from institutional buyers,  
  2. Increased awareness and adoption of blockchain and cryptocurrencies, 
  3. Ease in Bitcoin purchases and transfers, 
  4. Every other ICO does not turn out to be a brazen fraud anymore, and much more. 

Now that we understand that the price of Bitcoin has been increasing because of some reliable reasons, we can safely say that the future is not as dark for Bitcoin as we would have predicted some years back. Also, we cannot ignore the fact that Bitcoin is nearing its supply limit of 21 million. This can be taken as an assurance that the price will ultimately increase in the long run. 

A crash is near, no doubt, but given the extraordinary amounts of adoption by institutions, it would be a surprise if bitcoin dropped below $20,000 any time soon. Price crash is typical for Bitcoin, or any other cryptocurrency for that matter, and if history is any guide, prices will probably recover soon after.  

However, the cryptocurrency market is too new to make any predictions about. And Bitcoin is still a speculative and risky asset. And if history is any teacher (and it often is), there will be more than a few more steps backward on Bitcoin’s journey to the moon. 

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About the Author – ANSHULI SONI

Anshuli Soni is a Financial Analyst at Admantium Crypto Advisors, an investment banking and consulting firm focused on blockchain technologies. We help early-stage entrepreneurs and startups in Building Business Models and Developing Business Ideas take a 360-degree view of how to build a sustainable business using blockchain technologies, translating concepts into clear-cut plans. We also help raise external funding to kickstart or grow your business.

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