We have seen an unprecedented rise in the value of Bitcoin in the year 2017. With the increasing interest of media outlets in the value of Bitcoin, Bitcoin has been noticed by the public as well. Before that, Bitcoin was a phenomenon restricted to a specific segment of people.
Now that the Bitcoin has shattered the 11,000 dollars barriers, it is expected that a value correction might be on its way. On the other hand, some experts believe that due to an increase in demand the Bitcoin value will continue to rise and will ultimately reach $40,000 by the end of the year 2018.
An economics expert, Panos Mourdoukoutas, has said that there are two events which can shatter the value of Bitcoin and bring it back to 1000 dollars.
- “There are a couple of things that could kill the hype for the digital currency and help push demand in the opposite direction. One of them is a Lehman or Enron-style fraud event, not necessarily in the Bitcoin market, but in some other cryptocurrency market, which brings to mind the wild west mentality of mid-19th century capitalism.A major cryptocurrency fraud event could depress demand for Bitcoin in two ways. One of these is a “run on the bank,” style panic as fear replaces greed. That would provide the very much needed excuse for big governments and big banks to tame the growth of the “people’s currency.””
- “The second thing would be the end of easy money. That would push interest rates higher, and take the “air” out of the Bitcoin bubble that has turned into mania.In that light, it should be noted that the 10yr US Treasury yields have already edged closer to 2.50%, almost a point higher than a year earlier.Higher interest rates could put pressure on Bitcoin demand in a couple of ways. One of them is that higher interest rates raise the “opportunity cost,” of money used to buy Bitcoins. That’s especially the case for investors who buy Bitcoins on “margin,” with borrowed money, and are expected to face “margin calls” should the digital currency drops precipitously.”
While Panos analysis is important and has value, it must be noted that Bitcoin’s underlying technology is Blockchain, and the same protocol can be used to create other cryptocurrencies as well. We already have seen Bitcoin Cash, Ethereum, Ripple, Litecoin, Monero and other coins appreciating in value using the blockchain concept.
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So, if any of the above unfortunate events occurs the investors might flock to other cryptocurrencies and work towards their mainstream adoption as well.
Image – CoinTelegraph