Is Bitcoin Going To Spike Again?

by Trading 101     Jul 16, 2019

Bitcoin has been a big focus of the financial industry and all forms of media for the last year. It’s been one of the most exciting, most misunderstood and most talked about topics in the business world since it started making waves in 2016 and then really escalated in 2017 when the price of Bitcoin started taking off into the $10,000+ category. Two or three years ago, Bitcoin would have been merely scoffed at by traditional trading 101 practitioners.

Today it’s covered with the same level of seriousness as other, more traditional types of trading. Bitcoin is revolutionary due to its underlying blockchain technology which has the potential to fundamentally change the way information and data are handled in the business perspective. Bitcoins are simple in concept but more complex in application. The concept is that Bitcoin is money for the internet and can be ultimately considered in the same vein as a debit card – it can pay for goods and services, it can be sent to other people with an account.

Of course, Bitcoin is far more complex than that and it has a very different value outside of using it to buy and sell things – Bitcoin is primarily seen as an investment opportunity as its value is volatile and can fluctuate drastically in a matter of hours. The question whether Bitcoin is going to spike in price again like it did in December 2017 is an important one that everyone is trying to answer, as it’ll determine for many whether it’s worth research Bitcoin trading 101.

1) The Historic Volatility of Bitcoin

When looking at the Bitcoin price history, we can observe a large amount of significant spikes in value since 2013. One of the main factors that seems to influence Bitcoin spiking is the stability of the exchanges it’s being traded on. There had been several instances, such as the cases of Coincheck and Mt.Gox where failures on the exchanges’ end resulted in the price being brought down significantly.

There have also been positive spikes around times when the developers behind Bitcoin have made major announcements or deployed technological improvements to the blockchain that governs Bitcoin. The same is true for whenever Bitcoin receives positive PR from experts – of course, the same is true for any other commodity as well.

2) External Factors

There are several other key factors to consider in the pricing of Bitcoin and whether it’ll spike again – factors which lie outside the control of the technology behind Bitcoin. The most basic way to look at the question is supply and demand. A big concept that’s still unclear at the moment is what will happen once all Bitcoin tokens are mined and the currency reaches the soft cap that determines how many total Bitcoins can be in circulation at any given time.

With less than 20% of Bitcoins still being mineable, the question of what happens after the 21 million token mark is reached, remains. Some experts believe that the people behind Bitcoin will be forced to raise the limit or risk the loss of all miners, which are essential to the Bitcoin ecosystem. Others believe that once the supply is maxed out, the imbalance between supply and demand will aggressively spike the prices of Bitcoin once more.

Government regulation is another external factor to keep an eye on as it’s a generally good indicator of how the market will behave. Should governments start to aggressively crack down on trading and impose strict regulation, chances are high that Bitcoin will see an aggressive drop in price as one of its attractive features is lost. On the other hand, some governments are supporting the shift to cryptocurrency and are researching their own uses for the technology, which gives Bitcoin and other altcoins an unprecedented level of credibility.

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