This is a guest post by Mary Ann Callahan, she is an expert on Bitcoin-related topics, and is a Journalist at Cex.io – cryptocurrency exchange. She is working on articles related to blockchain security, bitcoin purchase guides or bitcoin regulations in different countries.
Bitcoin has been in a major slump in 2018. Some media outlets have been predicting that a recovery is just around the corner, while others have been saying that Bitcoin and cryptocurrencies are dead. If you look at the core value that Bitcoin and cryptocurrencies bring into the world, you can start to understand how that value can grow in the future, and when that growth might continue. Here are the most important reasons that indicate the Bitcoin to USD price will eventually recover and give us an idea of the timeline when it might happen.
Firstly, Some Perspective
It’s easy to focus on the 60% drop in the Bitcoin price in 2018 and think that the worst has happened. But in a new and emerging industry, ups and downs (and this is a major down) are inevitable. Bitcoin is still an emerging technology that’s been growing every year. Even with the huge drop, the Bitcoin price still more than doubled from July 2017 to July 2018.
Hype was the main factor that drove the Bitcoin price to $20,000 in the span of a couple of months. The public isn’t likely to get caught up in another hype cycle so easily next time. That means a BTC to USD recovery will require genuine factors to boost its price. Here are some of the most important factors that might drive the next Bitcoin recovery.
A Digital World Needs Digital Currencies
Our lives are quickly becoming increasingly digitized. This is especially true for our economic lives. With this new way of living comes the demand for new technologies that suit the needs.
Bitcoin is one of those technologies. It is a decentralized, international, trustless currency that can’t be controlled by any government. Bitcoin’s underlying technology, blockchain, makes these characteristics possible, and they make it perfectly suited to this new world. With cryptocurrencies, it’s possible to have extremely fast, low-cost borderless transactions.
Blockchain technology is taking off in a big way. There are new cryptocurrencies popping up all the time and new innovations that make the technology even more powerful. You might think this is bad for Bitcoin as it will increase competition. But that’s probably not the case. Bitcoin is still the number one cryptocurrency in the world. As the cryptocurrency sector grows with new users and applications, so does the Bitcoin price.
Some investors like Cameron Winklevoss think that Bitcoin will act as a kind of digital gold or a digital store of value that anyone in the world can join in with. If this is the case, then the growing demand for digital currencies and decentralized applications will push the price of Bitcoin upwards.
This demand for digital currencies is growing very quickly, especially in countries that don’t have a stable currency.
Another factor that could drive a Bitcoin price recovery very soon is mainstream financial adoption. Banks and investment firms have been wary of Bitcoin for the last ten years. Understanding of the technology and how it will be used was too low, and the risk was too high.
That’s all changing now. Banks are starting to consider the possibility of adopting cryptocurrencies in different ways. Some are looking at how cryptocurrencies like Bitcoin could be useful, while others are experimenting with creating their own digital currencies. And it looks like Goldman Sachs will be the first Wall Street player to open a Bitcoin trading firm.
This is a big change in attitude over the last few years. It wasn’t too long ago that many banks started banning their customers from buying cryptocurrency with their bank cards. Right now, it’s fairly difficult for regular people to buy and use cryptocurrency. This means that most people simply aren’t interested. As adoption by the financial industry grows, Bitcoin will become easier to buy and use. This will bring in more users and drive up the price of Bitcoin.
Bitcoin is also becoming more attractive to mainstream investors. So far, a lack of technical understanding, social proof, and tax frameworks have kept institutional investors well away from the cryptocurrency market. Now, things are starting to shift, with some big names and hedge funds showing interest in cryptocurrencies.
The big returns and high volatility in the cryptocurrency market are attractive to many investors. This is especially true in the current financial environment with the lowest volatility in over fifty years. Some investors want to see if they can bet on the price of Bitcoin as a new way to outperform their competitors. When these institutional investors (the so-called ‘big money’) do start to buy up Bitcoin, the price will likely jump very quickly.
Regulation is probably the most important word in the cryptocurrency industry at the moment. Regulators from countries and international organizations around the world are, right now, deciding the legal and regulatory frameworks that Bitcoin will have to operate. This could go one of two ways.
Firstly, regulators could make negative moves to ban or restrict the use of cryptocurrencies. This has already started to happen in places like India, and it has had a negative effect on the Bitcoin price.
However, in other places, like the United Kingdom, regulation is going in a good direction for cryptocurrency. Positive regulation for Bitcoin means preventing malpractice in the industry and building clear rules for Bitcoin-based companies to drive investment. In fact, regulators in some countries are even starting to feel pressure at quickly bringing in favorable rules around cryptocurrency to attract companies and investment.
This is excellent news for the Bitcoin to USD price and anyone investing in the future of cryptocurrency. Positive regulation is on the way, and it could be coming quickly. With Recovery Will Come Volatility
These are all arguments that the Bitcoin price will recover in the future and some reasons it could happen fairly soon. But they all point to the big, underlying trends of the cryptocurrency industry. Unforeseeable events and bumps in the road will still be commonplace. But, if you have the patience, it looks like Bitcoin will recover very strongly, just like it has every other time.