The dramatic bitcoin price rise in 2017 was fueled by euphoria. People wanted to get in on cryptocurrencies to get rich quick. Bitcoin, the most popular virtual currency out there, has seen extreme volatility in prices since December 2017. Its prices have gone down from the December high of $19,800 to around $11,000 now. At one point, it was trading below $10,000. Will the cryptocurrency prices surge in 2018? If yes, what factors are going to fuel the bitcoin price rise?
Buffett and Kovacevich are skeptical, but…
Former Wells Fargo CEO Dick Kovacevich described bitcoin as a pyramid scheme in a recent interview. He believes its fundamentals “make no sense.” People are buying bitcoin only because they are hoping that someone else is going to buy it at a higher price. Berkshire Hathaway CEO Warren Buffett has also predicted with “almost certainty” that cryptocurrencies would come to a bad ending.
Buffett and Kovacevich offer a skeptical outsider’s perspective on the future of bitcoin. But there are many experts closely involved in the cryptocurrency market who believe that bitcoin prices haven’t peaked yet. TenX co-founder Julian Hosp told CNBC that bitcoin prices could hit the $60,000 mark. He said the recent decline was a “welcome dip,” offering investors an opportunity to buy the virtual currency at a lower rate.
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Hosp said most industry insiders were expecting its prices to fall given the “dangerous” rise in its value through 2017. He warned that the virtual currency would decline again in the long run, if not soon. We will always see an upward swing followed by a dip down. Hosp believes that the anticipated bitcoin price rise wouldn’t be a bubble that would just burst and everyone involved would lose their money.
Hosp told CNBC that money would continue to flow into cryptocurrencies that have new technology, that deliver value, and are used by people.
Bitcoin price rise to be followed by a decline
Julian Hosp’s prediction pales in comparison to what Saxo Bank analyst Kay Van-Petersen has to say. Van-Petersen predicts bitcoin could hit as high as $100,000 per coin by the end of this year. If her prediction pans out, we will see bitcoin prices going up by nine times in about a year. She had predicted in December 2016 that the virtual currency would hit $2000 in 2017. As we have seen, bitcoin has shot up from $900 at the beginning of 2017 to $18,000 at the end of the year.
Van-Petersen said the bitcoin was currently “building a foundation.” It would soon start going higher. She warned that the prices could fall dramatically by the year “after its spectacular peak.”
Bespoke Investment Group’s blockchain analyst Dan Ciotoli predicts the bitcoin price rise is imminent. He says it “could nearly triple” by the year-end. The recent decline in bitcoin prices was triggered by the panicked get-rich-quick-investors exiting the cryptocurrency market. The upcoming boom would be driven by bitcoin-denominated commerce and the Lightning Network that would make it easier, faster, and cheaper to convert virtual currencies into dollars.
The gist is that bitcoin prices would keep fluctuating throughout the year. Even if they hit new record highs as many analysts predict, there will be occasional corrections that would bring some sanity into the cryptocurrency market. If you are planning to dip your toe into the world of virtual currencies, here’s how you can buy bitcoin, ethereum, ripple, and other cryptocurrencies right from your iPhone or Android device.
How will government regulations affect bitcoin prices?
Many countries are planning to ban bitcoin or at least regulate cryptocurrencies. The government actions would also play a crucial role in where the virtual currency prices would go. South Korea is preparing a bill to ban cryptocurrency exchanges. China is weeding out bitcoin mining citing financial risks and excessive electricity consumption. Germany and other countries have also indicated that they were looking into what could be done to regulate bitcoin.
Speaking at the World Economic Forum, British Prime Minister Theresa May expressed concerns that criminals were using bitcoin, ripple, and other virtual currencies for illegal transactions. She said her government was looking at bitcoin “very seriously.” Britain’s Chancellor of the Exchequer Phillip Hammond has also called for regulations to govern virtual currency trading. Hammond noted that cryptocurrencies must be regulated before their outstanding amount becomes “large enough to be systematically important in the global economy.”
Government regulations don’t mean bitcoin prices are going to collapse. The regulations would help legitimize bitcoin and enhance their acceptance. Of course, the fraudulent brokers might be forced to get out of business and criminals may have to find other ways to pay for illegal activities. But it will increase the faith of the larger population in digital currencies. People would feel more comfortable investing in bitcoin. Regulations could hurt the bitcoin price rise in the short term, but it would lead to longer-term stability.