Bitcoin Could be the Underdog Story of 2016
Currency trading is a complicated, yet often rewarding business. It takes a good sense of where a country’s economy is heading and some basic knowledge of economic history. You could make a pretty penny exchanging currencies as their values rise and decline.
Bitcoin, unlike most global currencies, is hard to predict. A country’s GDP doesn’t have a direct impact on its value. Small actions such as police seizures and the closing of popular hubs for bitcoin exchanges certainly can. Mining bitcoin has become a lucrative business for entrepreneurs with access to cheap electricity and dedicated mining hardware including application-specific integrated circuit (ASIC) systems.
But for all the little things that can affect Bitcoin’s value, 2016 was a very positive year for the virtual currency. Starting in January with a going rate of as little as $377 USD per bitcoin, a single virtual coin sells at $971 on New Year’s Eve. That’s a 2.5x return on investment in one year.
This isn’t Bitcoin’s First Boom
This isn’t the first time Bitcoin has had a surge in value. In November, 2013 a single bitcoin traded for $1,108. China was poised to make Bitcoin a legitimate global currency with major companies poised to start accepting Bitcoin as payment. That is, until the Chinese government stepped in and put a stop to it. The result was a quick, yet steady decline in value. By January of 2015, Bitcoins were trading in the low $200s.
Here, it would sit quietly for the following year, making small gains and losses. It was believed by some that Bitcoin had finally leveled off, becoming a stable currency as the initial bullish surge of excitement waned. Bitcoin was counted out by economists and pundits alike. This steep rise and fall of value was seen as a sign of its weakness as a currency.
That is… until 2016.
China, Brexit, and The U.S. Election Helped Virtual Currency
The results of Britain’s vote to leave the EU and the subsequent drop in value of the British pound made Bitcoin more appealing. Additionally, the United States’ own Presidential election embroiled the media throughout the year. This spread uncertainty not only about America’s place in the global economy, but where it go after seven years of gradual recovery from the 2008 recession.
Additionally, China is taking a fresh look at blockchain technologies which power cryptocurrencies like Bitcoin. This change of tone present in state-run media gives hope that electronic currencies, if not Bitcoin, are down but certainly not out.
Where Will Bitcoin Go in 2017?
It’s hard to say what will happen to Bitcoin in 2017. If the pound recovers fully, and the United States enters into the Trump administration without any major setbacks in the first six months, there is a good chance that Bitcoin will level off or decline again.
If Bitcoin can gain trust in a fierce new global economy and encourage countries, companies, and individuals to invest in Bitcoin as part of their diversified portfolios, its rise may well continue well into the next year.