It’s 2013 all over again as bitcoin’s bull run pushes towards a four-figure USD value. Seasoned bitcoiners, however, will have their fingers crossed that external events don’t intervene once more to spoil the year-end party.
At press time, bitcoin was sitting at around $914 USD. That follows a slight dip after the price topped $910 a couple of other times in the past 24 hours.
Let’s reflect — that’s up from $552 in July, and $445 in April before bitcoin left the $400s well behind. On Christmas Day 2015 it sat on $455, while the turkey roasted in 2014 that figure was even lower, at $322.
Despite the seasonal symbolism, bitcoin’s rise in the past month has little to do with Christmas, turkey or anything on the Western calendar at all. The often-prophetic Vinny Lingham of Gyft and Civic wrote in May 2016 that increasing use cases and the notion of bitcoin as a commodity, not a currency, would push its value close to $1000 by year’s end.
Bitcoin Proving Itself as a Viable Commodity
Perhaps it’s bitcoin’s value as a commodity and investment vehicle driving the price in 2016. It still isn’t widely accepted as a currency, but its value is clear nonetheless.
The price has risen steadily since early 2016, recovering even from significant dips that surrounded hack attacks on popular cryptocurrency exchanges like Bitfinex.
The simple reason? The longer bitcoin exists, the more it proves its utility as a viable commodity. It’s shrugged off a hundred-odd obituaries and naysayer analyses, building resilience and reputation with each passing month.
But Who Has Use for Such a Commodity?
China recently announced new restrictions on the amounts of money its citizens can withdraw in Macau. China’s Vegas has long been a popular route out of the country for the country’s currency, over both official and unofficial channels. Crackdowns on either will leave players looking for other alternatives.
Then there’s India. Reported bitcoin prices of $900 there indicate at least some people are buying into crypto to deal with the government’s sudden cancelation of large-denomination banknotes. So what if most Indians haven’t heard of bitcoin yet? With every new thousand who do, the price increases.
This “war on cash” only escalated in 2016, in economies of all sizes. People who understand money also realize the privacy and economic implications of currency you can’t withdraw — and they’re also looking for new options.
In the U.S., the so-called “Trump Effect” that sent the Dow Jones and S&P 500 indices to record highs in the post-election period doesn’t seem to be increasing gold prices. The USD itself remains strong. Neither of those realities suggest President Trump is moving the BTC price. A fear of government intent is more likely to boost bitcoin.
Threats to the Current Bull Run
That said, it was China’s December 2013 announcement that it would restrict bitcoin exchanges that hosed down that year’s Christmas parties. Then when Mt. Gox faceplanted a few months later, it took bitcoin with it.
Even the $72 million Bitfinex hack, plus smaller-scale attacks on ShapeShift and Gatecoin, didn’t stop bitcoin’s 2016 rise. While there are likely to be dips and profit-takings following large price jumps, it would now take a disaster of epic proportions to sink bitcoin to 2014 levels again.
The bitcoin community continues to argue over scaling solutions and consensus. But it’s treading carefully, understanding what’s at stake. Even in its current form, Bitcoin is valuable to large numbers of people. Its supporters will want to keep it that way.
What’s your take? Are you buying or selling bitcoin in the current market, or just enjoying the popcorn? Let us know in the comments.
Image via Geograph.org.uk