Most people were amazed that the price of Bitcoin could go from $330 to hovering around $7,500 in just 24 months 2017. That is a whopping 23-fold increase! No asset class in the world has performed better, and it seems that there is nothing stopping this bull run from reaching even greater heights. Stories of people finding bitcoin in their computers that are now worth millions of dollars are going to start popping up in the news once again, and the media cannot get enough of it. And of course, it makes sense for this to be over hyped because 1,000% growth in 24 months is not normal.
The thing is, people also want to know why bitcoin’s value keeps rising. Why is a Bitcoin worth over $7,500 today? why is Bitcoin hovering around $8,500? why has Bitcoin been on the rise of late?There is only one reason for the price of Bitcoin, or the price of anything else for that matter, to go up or down, and that is.
The law of supply and demand. Free market forces dictate that when there is more demand than there is supply, prices will rise. That’s it. There is nothing too complicated about it. The reason why Bitcoin’s price keeps rising is that there are more people buying bitcoins than there are people selling bitcoins, and because Bitcoin is capped at 21 million units.
Japan, one of the most advanced countries in terms of technology and also one of the biggest economies in the world, just made Bitcoin a legal payment method nationwide. Suddenly, Bitcoin became useful in Japan for merchants and consumers alike. This drove the demand for Bitcoin up, and since it is a very scarce asset, it naturally also drove the price up. It actually increased by over 100% since then.
Bitcoin has become a safe haven asset for investors, much like gold or other commodities that go against the flow of capital. Simply put, when the economies of the world are tanking, Bitcoin price tends to go up. Savvy investors are starting to learn that taking a small percentage of your savings or investments and placing them into Bitcoin will offset most losses and actually give much bigger gains, as proven historically.
So, what is the real value of one Bitcoin? This can only be determined by the free market, and no one else. What gives it value? It’s utility and scarcity, or demand for its different use-cases outpacing its global supply. Will it keep rising tomorrow? Who knows? But it is definitely here to stay.
The truth is, the price of Bitcoin is actually the least interesting thing about it. There is a technology behind Bitcoin called the blockchain that has captured the imagination of thousands of the smartest and most entrepreneurial minds in the world. It has created a multi-billion dollar industry that is now working together in building applications and services that will bring the benefits of Bitcoin and blockchain technology into mainstream acceptance.
What a nice presentation! It is interesting and motivating. It encourages me with more hope in cryptocurrency. Thank you for this information, and don't forget to work on BCH too.