Here we have gathered the most interesting currency forecasts of analysts from the key commercial banks…
Will Bitcoin stop falling?
On Tuesday, Bitcoin traded below $6000, the lowest price since November 2017, however, soon it changed the direction and increased in 23% in a day. It seems like it is not going to stop plunging.
What caused such fall? Will it stop?
Analysts give several reasons for such dramatic drop of the cryptocurrency.
Experts see the main reason for speculations on the Bitcoin futures market. After Bitcoin futures trading began on CBOE exchange in Chicago, the price of Bitcoin increased immediately. The price was rising until investors did not stop purchasing futures. When cryptoinvestors saw the slowdown in Bitcoin’s price, they started to reduce their positions, it led to the cut of the market capitalization.
Also, experts suppose that the opportunity to play in the fall of cryptocurrency led to a huge number of sellers on the market and collapse in prices.
Volatility is the next factor. Cryptocurrencies are naturally volatile. However, additional attention from the US and Asian regulators makes them even more so. For example, the most recent leg down happened because of the news from Bloomberg. The agency reported that two US controlling companies are going to ask the Congress to consider federal supervision for digital-currency trading platforms.
Nowadays, more and more countries talk about tightening policy, trying to restrict cryptocurrency activity. For example, China has already banned ICOs and domestic exchange, soon the country is going to block users from accessing websites with cryptocurrency trading services or ICOs.
Huge hacks harmed reliability of Bitcoin as well. Cryptocurrency exchange Coincheck, one of Japan’s largest cryptocurrency exchanges, lost about $500 million worth of digital coins in January.
Looking at reasons above, we can say that the fall of Bitcoin was caused by speculations around it. The reliability of the cryptocurrency is damaged on purpose, that is why the Bitcoin is falling.
So what about the future of Bitcoin?
As usual, there are two opposite views. Can you guess which?
There is an unusual theory that well-known cryptocurrencies will be replaced by national cryptocurrencies. The founder of Universa Blockchain Alexandr Borodich said in Davos that governments are highly interested in launching their own cryptocurrencies. They will be secured by commodities.
It is a possible scenario because as we can see now, governments are trying to control cryptocurrency market and mining more and more. New restrictions crash the market and it is supposed to be done on purpose.
However, despite doubts about the future of Bitcoin, most experts are sure that it will exist and will be widely used.
First of all, blockchain will be used worldwide in the near future. So Bitcoin will be used within it.
Secondly, there are demand and supply still. People continue to buy Bitcoin, despite its fall. A conception of FOMO - fear of missing out - works here. Mostly, people regret that they did not invest in Bitcoin before, so they will do it no matter what.
The third reason is that Bitcoin is supposed to have a good store value, said Ran Neu Ner, ONchain Capital founder. He supposes that Bitcoin has a future as the digital gold that is more convenient to use than real gold.
All these factors are anticipated to support Bitcoin.
So what about the price forecast?
There is an interesting opinion that the price of Bitcoin will fix at $5000. The explanation is simple: $5000 is a cost of mining. This amount of money is enough for a miner to produce tokens and get profit. Later the price will rise because of the increase in the mining cost. When all tokens are produced, the price will depend on the role of Bitcoin in the blockchain.
Someone is even over-optimistic about Bitcoin. For example, Mr. McAfee (the founder of the software company McAfee.Inc) said that he will eat his own man meat if one bitcoin isn’t priced at $1 million by 2020.
However, if we look at the situation more rationally, it is more likely that Bitcoin will be at the level of $10000 – the half of its greatest price, that was increased speculative.
To sum up, it is quite difficult to predict the future of Bitcoin now because it is highly volatile. As Bitcoin has declined with such an incredible speed, it will not be a surprise, if it starts rising fast in one week. We can see that nowadays cryptocurrency market is highly speculated. It seems like the speculative news is created with a purpose to crash Bitcoin. However, most of the experts forecast the positive future of Bitcoin.
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