During the past year, the price of bitcoin skyrocketed a whopping 210 percent in the international market, and in June, 2017, hit its all-time high value of $3,000.
Bitcoin was introduced back in 2008, and in these past 8 years, it has fought off skepticism, experienced volatility, and has been rejected or even labeled illegal several times, only for it to come out stronger than before.
Now, it is being recognized by major multinational corporations and governments, and considered as an emerging asset class. While there are still many countries that are not sure about this cryptocurrency, numerous nations are showing support toward bitcoins prevalence, increasing its demand in the global market.
Here are a few reasons that have led to the high value of bitcoin:
1. A Worldwide Increase in Demand for Bitcoin
Cryptocurrency was once seen as an ambiguous form of money that computer geeks and hackers used for making secret transactions through online means. Now, it has become so mainstream that it has caught the attention of many investors as a lucrative new asset class. Many investors have set up hedge funds worth millions of dollars to acquire bitcoins.
Recently, the cryptocurrency left gold in its dust in terms of value. People are increasingly accepting digital currencies as an alternative asset for investment, believing they can hold their value during the troubling times of economic instability. Recent events in the United States and Brazil led to political upheaval causing considerable drops in the dollar value, which may have resulted in the recent surge in its demand.
In addition, the dramatic increase in the value of Litecoin, Ethereum, and other cryptocurrencies may have also indirectly benefitted bitcoin. People can now buy these currencies in exchange of real money, but it is still easier and simpler to use bitcoin to purchase them. This means that people are purchasing bitcoins in order to invest in more exotic currencies.
2. Funding from Blockchain Companies
Blockchain companies utilizing the token are another significant factor contributing to the surge. Bitcoin startups that have managed to attract blockchain companies funding and tremendous investments in bitcoins worth a total of $550 million in 2016 are also spiking the bitcoin’s demand in 2017. Moreover, several renowned investors have been raising their stakes in Bitcoin, which may direct towards a promising future for the digital currency.
3. Economic Changes in China and Japan
Japan has introduced new rules and regulations in April, 2017 that treat bitcoin more respectfully, allowing it to become a part of its banking system. Local investors responded quickly to this change by exchanging yen for bitcoin, as the country experienced a burst of trading activity.
China, where the government and authorities were highly skeptic about bitcoin, has finally decided to make its policies more tolerant towards the digital currency. According to a CNBC report, some analysts have suggested a significant drop in price differences of bitcoin between Chinese and US exchanges. This suggests only one thing –investments involving bitcoins in China are less risky.
In August, 2017, the exchange price of bitcoin has been oscillating between $3,500 and $3,800, showing an upward trajectory in its value trends.
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