Bitcoin has become known for its spectacular highs and killer lows. In light of the recent slump, we asked industry experts for their opinions on the reasons behind bitcoin’s performance.
Ah, bitcoin. We celebrate its highs with dreams of private jets, and mourn its dramatic falls with a silent, “I hope this isn’t proof that the bubble crowd can tell the future.”
For those of us who’ve been invested in bitcoin for a while, it can sometimes be a painful experience looking at our wallet history—what was worth so very many dollars just a short few months ago, now sits at much less than its former, supposedly unstoppable climb.
While this has been the source of much panic and anxious sleepless nights for investors new to crypto, veteran investors knew what goes up may well need to come down, but it’s deadset sure to fly skywards again.
Now that everyone’s favorite pioneering cryptocurrency is back to a healthy US$9,608 at the time of writing (from its gut-wrenching low of US$6,000 on February 6), we asked the industry for their opinion about bitcoin’s recent slump.
Jason Fernandes, founder of smartphone notifications blockchain startup FUNL:
I think the dip is likely related to credit card companies en masse deciding they wouldn’t let customers buy crypto with their cards; also, perhaps, the rise in transaction fees. The steep drop was due to speculators fleeing. There is a theory that bitcoin prices are correlated with the likelihood of a bitcoin to be held rather than exchanged—that would imply an upward curve over time. If the price of bitcoin is determined by the chances that a bitcoin is spent rather than saved, once bitcoin becomes widely used as currency rather than a store of value, it becomes a “hot potato” where people are just swapping bitcoin back and forth— something that won’t cause a price increase. There is a researcher, Alexander Hirner, who’s extended this model to argue that increased use of bitcoin transactionally will, in fact, make the price go down. His argument is that lots of people using bitcoin means that there will be fewer “stagnant” bitcoin causing an overall price drop. He has some equations that back it up. Then again, it could all just be because of Tether.
US-based blockchain personality and partner at blockchain and cryptocurrency consultancy firm Axes and Eggs, Samson Williams:
You’ll see another bounce once US tax returns get done between now and April. Then you’ll see another bump/dip in the spring. In general, at the end of Q2, BTC will be stable around US$15k then jump to US$26k by end of Q4, as the US economy slips into recession, driven down by whatever Trump is Trumping, debt ceiling, Brexit and Student loans. #2018Recession
Read Invest in Blockchain’s interview with Samson Williams.
Source/More: What’s Up With Bitcoin? We Asked Industry Experts For Their Opinions – Invest in Blockchain
