Bitcoin 101

BTC price: history, factors that determine BTC price, and future forecast

It’s nearly impossible to talk about cryptocurrencies without mentioning bitcoin. Starting from very humble origins and with a view to disrupting government control over public finances, bitcoin has grown to become a powerhouse in the sector of finance. More and more merchants, businesses and even governments are adopting the coin, and the blockchain technology behind it, thus boosting BTC price further.

In this guide, we’ll take you through BTC price history, future forecasts and factors influencing BTC price.

A brief history about BTC price

BTC price history chart

BTC price history

  

BTC price in USD

BTC price in USD

There have been four major eras in the brief history of BTC. The early hobbyist days went from bitcoin’s 2009 launch to the rise of two dominant platforms: Mt. Gox exchange and the Silk Road dark marketplace. The collapse of both developments resulted in turmoil between late 2013 and early 2014. BTC price plummeted from over $1000 to under $300, where it largely stayed for two years.

Between 2014 and 2016, activity diversified away from the coin, in two directions. First, Ethereum and other platforms generalized Bitcoin’s digital currency into a mechanism for decentralized applications and services. Second, enterprises and governments got excited about distributed ledger systems that added a permission layer to Bitcoin’s open network. These were the days of “blockchain, not Bitcoin.”

In 2017, the pendulum swung again, as the BTC price and other cryptocurrencies suddenly took off. Initial coin offerings (ICOs) and crypto asset trading were all the rage. Bitcoin’s price briefly approached $20,000 in December 2017. Bringing the total value of cryptocurrencies in circulation to roughly $750 billion.

This saw millions of retail investors around the world pile in, with hopes for massive gains. The Coinbase exchange’s mobile client was briefly the top download in the Apple App store. However, in early 2018, the market corrected. Bitcoin fell swiftly to roughly $8,000. Regulators such as the SEC started going after fraudulent and non-compliant ICOs, while China and South Korea banned them entirely. What’s surprising isn’t that the bitcoin bubble popped. Unlike 2013, it didn’t, it deflated in a relatively orderly way.

The folk explanation is that crypto holders, convinced of the fundamental superiority of this form of money, will hold on (or HODL in the lingo) when normal investors would run for the exits, triggering a panic.

Factors that determine BTC price

BTC price is measured against fiat currency, such as BTC/USD. Bitcoin hence appears superficially similar to any symbol traded on foreign exchange markets.

However, unlike fiat currency, there’s no official BTC price; only various averages based on price feeds from CoinDesk, Bitcoin Average and global exchanges. It’s normal for bitcoin to trade on any single exchange at a price slightly different to the average.

Discrepancies aside, what factors determine Bitcoin’s price?

Supply and demand

Supply

Similar to the rarity of gold, bitcoin was designed to have a fixed supply of 21 million coins, over half of which have already been produced.

Several early adopters were fortunate or wise enough to earn, buy or mine vast quantities of bitcoin before it held significant value. For instance, Satoshi holds one million bitcoins. If he were to dump these coins on the market, the ensuing supply glut would collapse the price.

Currently, miners produce around 3,600 bitcoins per day, some portion of which they sell to cover electricity and other business expenses.

Demand

With the current mining reward of 12.5 BTC per block solution, Bitcoin supply is inflating at around 4% annually, this rate will drop sharply in 2020 when the next reward halving occurs. That bitcoin’s price is rising despite such high inflation, indicates extremely strong demand, every day, buyers absorb the thousands of coins offered by miners and other sellers.

A common way to gauge demand from new entrants to the market is to monitor Google trends data (from 2011 to the present) for the search term “Bitcoin.” Such a reflection of public interest tends to correlate strongly with a price. High levels of public interest may exaggerate price action; media reports of rising bitcoin prices draw in greedy, uninformed speculators, creating a feedback loop. This typically leads to a bubble shortly followed by a crash. Bitcoin has experienced at least two such cycles and will likely experience more in future.

Other factors that determine Bitcoin’s price include market manipulation, fiat currency crisis and bank blockades.

BTC price prediction 2019

2019 will be a bullish year for Bitcoin, as by the adaptability will be higher as more people will start believing in the technology behind Bitcoin. The coin’s price will reach up to $20,000 by the mid of 2019. The more the trading, the more the price. Moreover, as we know, Bitcoins are scarce in circulation, that is, there can only be 21 million Bitcoins mined, out of which 17 million has been mined already, which means only 4 million to be mined, which will make its value more.

By the end of 2019, BTC price will reach $23,499, which means that the 2018 bearish trends and shifts to the bullish trend.

Reasons to back the $20,000 BTC price prediction for 2019

  1. ETF launch-  this is projected to draw in large institutional investors, it is expected that pensions and investment funds will start investing in this sector. At the moment, the funds are focused on capital assets investments that are a part of the regulated market.
  2. Industry experts- the crypto industry’s experts such as John McAfee, Tom Lee, Tim Draper, Michael Novogratz and Cameron Winklevoss have given quite bullish bitcoin price predictions in the last few months. For instance, John McAfee, the founder of the popular McAfee software and an ardent Bitcoin follower predicted bitcoin will hit $1 million by 2020 following last year’s prediction of $7,000 which was well surpassed.

Additionally, Tom Lee, exChief Equity Strategist JP Morgan, and head of research of Fundstrat believes that     bitcoin would reach $25,000, as he is counting on more institutional investors taking on Bitcoin and a steady increase in Bitcoin user base by 2019.

coinmag

Having contributed to many leading financial blogs, Ken's love for cryptocurrencies and the blockchain technology has him on high alert on all price developments within the cryptocurrency sphere.

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