Negative interest rates and efforts to ban cash money could help bitcoin prices soar in the coming few months.
That prediction was made over Twitter by Barry Silbert, the head of Digital Currency Group, who also cited mobile growth, capital controls, and currency wars.
“I couldn’t dream of more [sic] bullish case for bitcoin,” he tweeted on Tuesday.
Negative interest rates
Efforts to ban cash
I couldn’t dream of more bullish case for bitcoin
— Barry Silbert (@barrysilbert) February 16, 2016
Bitcoin is the currency of the Internet. It is mined with high-powered computers and operates with a distributed ledger that contains the payment history of every circulation.
One bitcoin is currently traded at US$419.00. The currency has rallied 30% from its three-month low of $322.00, registered on November 24.
Many economies may shortly adopt negative interest rates—charging commercial banks for the privilege of holding reserves with the central bank. Countries accounting for almost a quarter of the global gross domestic product (GDP) now have sub-zero interest rates, including the eurozone, Switzerland, and Japan.
Markets now attach a 10% chance (four-times higher than the start of this year) that the Federal Reserve will impose negative rates over the next 12 months in response to softer current economic activity indicators. (Source: “The consequences of negative interest rates,” CNBC, February 17, 2016.)
On Monday, the European Central Bank (ECB) said it was considering eliminating the 500-euro note, describing the bill commonly used by savers as an instrument also favored by criminals. (Source: “European Central Bank Weighs Eliminating 500-Euro Bill,” The New York Times, February 15, 2016.)
Bitcoin was created in 2008 under Satoshi Nakamoto—a programmer or a group of programmers—and does not operate under an administrator, like a central bank. Rather, a network of volunteers validate transactions via their computers.