Bitcoin witnessed a tremendous price rally in the first half of 2017. The price of the digital currency increased from $1,000 on January 1st to inch close to the $3,000 mark on June 12th. Will the digital currency continue this rally?
Since bitcoin has already gained so much in value since its inception in 2009 and is now trading near its historic highs, many investors ask themselves whether it is too late to invest in bitcoin or whether the price could continue to rise the way it has done in the past eight years.
In this article, we will discuss five trends to watch that could continue to push up the value of bitcoin.
Growing Bitcoin Awareness
Thanks to bitcoin’s impressive rally in the first half of 2017, the digital currency received a lot of mass media coverage around the globe. This has helped bitcoin awareness to grow. If you had asked the average person on the street about bitcoin a few years ago, you would likely have received a bewildered look. Today, bitcoin receives so much media attention that more and more individuals across all age ranges recognize that bitcoin is a global digital currency.
As bitcoin awareness grows, so does the demand for the digital currency. New users want to buy bitcoin and hold it in anticipation of a further potential price increase in the coming years. Growing bitcoin awareness is, therefore, a major driver for the price of bitcoin.
Increasing Global Demand
Global demand for bitcoin has been growing steadily. Individuals in large emerging markets such as China and India are increasingly buying bitcoin as an alternative investment with high earnings potentials, while users in economically challenged economies such as Venezuela, Bolivia, and Zimbabwe are buying bitcoin as a store of wealth. The rising demand for bitcoin, however, is not limited to these countries.
Across all continents, bitcoin exchanges are experiencing a surge in customer sign-ups as more individuals become aware of the returns potential of bitcoin as an investment as well as its utility as an alternative global currency.
Improving Regulatory Situation
Another important bitcoin-positive trend is the improving regulatory situation for bitcoin and digital currencies. Countries like Japan and, to an extent, the Philippines have legalized bitcoin as a payment method, while countries such as Russia and India are strongly considering implementation of the same legal status for digital currencies.
Other countries, such as the U.K. and South Africa, for example, see the benefits of financial innovation that stem from the digital currency sector. These countries are keen to create a positive regulatory environment for financial innovation to flourish.
An improving regulatory environment, especially one in which bitcoin is accepted as a legal payment method, provides a strong boost for the price of bitcoin. This was clearly evident when Japan moved to legalize bitcoin in early April and the price of bitcoin subsequently rallied from $1,100 to $1,400 in less than four weeks.
Expanding Bitcoin Ecosystem
Another trend to watch is the growing bitcoin ecosystem. More and more bitcoin startups are emerging across the globe. These startups are improving the way users can securely buy, store, send, and receive bitcoin. The better the bitcoin ecosystem becomes, the easier it becomes for people to buy and transact in bitcoin. This, in turn, helps to increase the demand and the use of the digital currency.
Also, the larger the bitcoin ecosystem becomes, the less likely it becomes that government and regulators will look to curb bitcoin activity, since bitcoin companies are creating jobs and are developing innovative new financial solutions. As previously mentioned, a positive stance toward bitcoin from lawmakers bodes well for the value of the digital currency.
More Institutional Money Flowing into Bitcoin
The fifth and final bitcoin-positive trend to watch is institutional investor money flowing into bitcoin. This comes in two forms. Firstly, there are established hedge funds and private banks investing in bitcoin and other digital currencies; secondly, there are new digital currency-focused funds launching that aim to benefit from the booming digital currency market.
Once bitcoin manages to establish itself as a legitimate alternative asset class for institutional investors, the price of bitcoin will likely experience a very strong rally. So far, bitcoin’s price action has been primarily driven by retail investors and a handful of high net worth individuals, but when institutional money starts to flow into bitcoin on a large scale, then Wall Street analyst Tom Lee’s prediction of the price of bitcoin reaching $55,000 could very well become a reality.
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