Bitcoin, the world’s largest and most well-known cryptocurrency, is well on its way to cross the $10,000 milestone before Christmas if its current growth is anything to go by. The digital currency has seen a great deal of success within 2017, having crossed the $1000 price point in January. This year has been the biggest for the price of bitcoin since 2014 when it rose above that milestone for the first time only to collapse and slowly build its way up again.
In the months since bitcoin crossed that milestone, it has continued to steamroll investor expectations and currently sits at just above $7000. This type of growth for a cryptocurrency is unprecedented, and investors seem bullish about the coin’s prospects. The market momentum clearly seems to be favoring bitcoin since its rapid ascension from the $3000 support level established earlier this year.
After China banned Initial Coin Offerings (ICOs) and cryptocurrency exchanges back in September, Bitcoin saw a 30 percent drop in price from $4500 to around $3000.
China has always been a major player in Bitcoin and cryptocurrency in general, especially since the country is responsible for a very large percentage of new bitcoins mined. The news of the China ban caused panic to spread in the global market, which led to turbulence amongst investors and consequently, the avalanche in price. The crash did not last very long, however, as the market shot to $5000 and higher just a few weeks later.
The fact that China’s ban had little to no long-term effect on bitcoin seems to further inspire confidence in Bitcoin’s core ideology of decentralization and independence. Even as governments around the world, including that of India and Vietnam, remain apprehensive and aggressively against cryptocurrencies, bitcoin clearly continues to flourish.
As with any booming industry, the cryptocurrency one has attracted a number of new investors, which in turn has pushed prices further still. The increased demand bodes well for the future of bitcoin. But with the influx of new investors, the currency also has its fair share of critics. Jamie Dimon, the Chief Executive Officer of JP Morgan, publicly criticized Bitcoin this fall and went as far as calling it “a fraud.”
Other bankers have similar views and believe that bitcoin’s demand will gradually diminish and pale in comparison to its current levels. If that turns out to be true, bitcoin’s price will turn out to be hyperinflated, unsustainable and at the end of the day, a bubble. And as with every bubble, including the Dotcom Bubble at the start of this century, there will come a time when it will burst and cease to exist.
Barring that, bitcoin’s price is popularly volatile in nature. Typically, the coin goes through corrections at the end of every bull run. As a result, it should be no surprise that when it reaches the $10,000 point, another correction will occur. That price is considered to be a psychological barrier for many investors who might sell their holdings, quickly dropping the currency’s worth.