What Is Happening To The Price Of Bitcoin? Startups and Industry Veterans Discuss.
Bitcoin first became prominent in 2013, when the price started at $13 and peaked at over $1,100. The People’s Bank of China, their equivalent of the U.S. Federal Reserve, sensitive to the potential that it was a Ponzi scheme or otherwise fraudulent, banned Chinese financial institutions from handling Bitcoin directly in December of 2013. This set off an eighteen month long downward trend, with the price bottoming at $177 in 2015.
The price began to recover and in the next eighteen months it again climbed to over $1,100. Again the PBOC made a policy change, the price slid to $800, and then quickly rebounded to about $900. The shape of the Bitcoin price graph is very similar to the last PBOC intervention, but the fundamentals are very different this time.
I made time to talk to major exchanges in the U.S., South America, China, and to Ark Investments, the first public fund manager to invest in Bitcoin. I asked the same questions of all four: What caused the price growth over the last eighteen months? What caused the recent price spike and following volatility? Do you think the price is stable where it is now? How has it affected your company?
Let’s start with the steady growth over the last eighteen months.
Everyone seems to agree that the price rise is based on Bitcoin’s fundamental value proposition. The world has agreed the coins are worth something, and that is based on a combination of Bitcoin’s utility as a means of transferring payments, as well as serving as a store of value. Despite the lack of a central authority guaranteeing the coin in the same way a fiat currency is created, there were $128 million in transactions the day I wrote this article, and there has been in excess of a billion dollars invested in blockchain technology companies, many of which I’ve covered here.
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