Bitcoin value has doubled over the past year making it the strongest currency in the world. Why have Bitcoin prices rocketed so much?
Bitcoin Value hits $14 billion Dollars
December has seen a massive rise in the value of the Bitcoin, today it was trading at $900 dollars as against $735 dollars at the beginning of the month. At the start of 2016 Bitcoin value was just $435 dollars. See live Bitcoin prices against all the major currencies.
Today’s price puts the total value of this virtual currency at around $14 billion dollars. No other currency has outperformed Bitcoin over the period. It has gained more than 100% in a year.
More and more currency traders are turning to Bitcoin because it has offered the best possible investment potential. However, the reason for the dramatic rise in Bitcoin value is not obvious. That is because Bitcoin is a global currency. It does not reside in country or indeed even a bank. It lives without regulation in the cyber world.
The reason it has increased so much recently is not as you might expect. It has been about what is going on in the world with some real currencies.
World Currency Problems
Some of the national currencies such as the Chinese Yuan have been sliding downwards and people have learned that there is an alternative to hedging against currency deflation. Brazil and India have also had currency deflation and in India it has been made worse by taking high value notes out of circulation to reduce money laundering. That means people have to bank their money or potentially lose it.
Given the volatility of some of the major currencies, people have been heavily investing in Bitcoin. That is because it is an easy alternative.
Bitcoin can be purchased without regulation, the Bitcoin market is not controlled by any country, bank or other organisation. It is a free market without borders or influence, something that no other currency in the world can boast.
Over the short history of Bitcoin its value has been higher, during late 2013 it peaked at $1163 dollars. The burning question is will it peak again? Personally, I think the answer to that is probably not for a while because the world currency markets are causing the boom in Bitcoin. When people have the option to turn away from establishment and stifling currency controls, many will walk away from it. Those controls are likely to remain in place for the foreseeable future so it is likely that Bitcoin value will be sustained for the immediate future.
Another factor affecting Bitcoin could be investors taking short profits but the people who are investing in Bitcoin do not appear to be doing that.
Importantly, there is also something else that will influence the value of Bitcoin which is not true of any other currency. There is not a bottomless pot of Bitcoins, they have to be mined and they can only be added to the system at a controlled rate. That factor will tend to increase Bitcoin prices, it is a supply and demand issue with the Bitcoin market.
Please note we are not investment advisers. We are just passing on knowledge we have gained and we do not accept any responsibility for any Bitcoin investment you might make. The value of Bitcoin is determined by the market and it can go up or down.
Gamblers might be interested in taking a punt on Bitcoin, it is not difficult to set up a currency trading account. All you need to do is sign up with broker and get a Bitcoin wallet to retain your virtual currency.
Update: Bit rocketed to over $2,500 Dollars by June 2017.
Update: By August 2017 the value of Bitcoin exceeded €3000.
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Disclaimer: This article only represents the author’s opinion and should not be taken as investment advice.