Tailwinds for Bitcoin Price
With the Bitcoin price (BTC price) topping $800.00 in recent weeks, some analysts are wondering if the cryptocurrency still has room to the upside.
The recent surge is courtesy of capital controls in China and a “demonetisation” program in India, both of which have spurred the Bitcoin price to three-year highs.
In trying to tackle corruption, India’s Prime Minister banned all 500 and 1,000 rupee notes. People were forced to wait in long lines to trade in their notes. Worse still, they only received half of whatever they turned in, so there was massive wealth destruction in the process.
As a result, many Indians began to seek out safe havens such as Bitcoin. The influx of new demand caused the BTC price to shoot up to $874.10, a level not seen since 2013. But can this bullish streak continue? Can the Bitcoin price break above $1,000.00 again?
The BTC price has fluctuated dramatically in the past few years, rising as high as $1,147.25 in 2013 before falling to $199.62 just 13 months later. As a result, many retail investors have shied away from investing in the currency. They view the BTC price as overly volatile.
But proponents have fired back, arguing that any short-term volatility is smoothed out over the long term, as more and more people use the cryptocurrency. Increased volume on the blockchain network will grant legitimacy and stability, they argue.
Moreover, they believe that the existing system of money is deeply flawed. Bitcoin attracted a cult-like following in its early years because the cryptocurrency has a fixed money supply. Unlike fiat currencies, there is no room for quantitative easing or other expansionary tools.
From the perspective of Bitcoin fans, the Bitcoin price is almost guaranteed to break above $1,000.00. But from a more objective standpoint, the future of the BTC price is more complicated.
For instance, Chinese regulators are looking at new ways to regulate Bitcoin exchanges inside their country. It is finally dawning on them that Chinese citizens are using cryptocurrencies as a loophole to get money out of the country.
If they clamp down on those exchanges, the Bitcoin price could be seriously damaged. It doesn’t help that similar moves are being made across the world. The U.S. Internal Revenue Service (IRS) is looking for back taxes from all Bitcoin transactions after 2013, and the European Union (EU) is perpetually trying to block progress in all forms.
In conclusion: while strong demand from India and China could push the BTC price above $1,000.00 in the near term, the Bitcoin price may not remain at those levels for very long.