An investor interested in investing in bitcoin will most likely sooner or later ask himself the question - what determines the bitcoin rate, what points need to be taken into account in order to confidently predict its price in the future?
The traditional answer to the question of the origin of the price, which is that it is determined by the balance of supply and demand, may seem too vague and general - to make decisions, the investor needs to know exactly what circumstances need to be paid attention in order to stock up with the necessary initial material for objective analysis Course and its prospects. Simply put, it is necessary to know what factors currently determine the price of bitcoin in the long run, more precisely, the common corridor within which fluctuations of its rate occur. Analytics bitcoin is able to give an answer to this question.
Somewhat later we will consider the factors that will determine the price of bitcoin in the future, but first I would like to briefly describe the current situation of bitcoin.
Why is it time to reform bitcoin and how exactly is it being proposed?
Despite the general increase in the bitcoin rate in recent months, several serious drains have markedly bruised the nerves of bitcoin investors. It is believed that the current instability of the course has its cause not only speculative activity - the efforts of the "bears", which periodically crush the course, would lead to much less panic, if not for the embarrassing condition in which today bitcoin is a payment system. In short, the network bandwidth, which has been unchanged throughout the life of bitcoin, is no longer sufficient today, and the transactions of the extremely grown-up bitcoin-audience become crowded in the traditionally limited blocks of the bitcoin network. From here, constantly growing commissions (especially they discriminate against small transactions), hence also financial-insecure delays in confirming transactions.
To solve the problem, it is proposed to update the bitcoin protocol. How exactly it is necessary to do this is an acutely debatable question: the Bitcoin Core team offers a "soft upgrade" of Segregated Witness, their opponents insist on a "hard update" of Bitcoin Unlimited.
Bitcoin - and to this day, the undisputed leader in the vast family of crypto-currencies. On the one hand, the deterioration of his position gives his closest competitors the opportunity to press him. If we study the course of high-status altcoyins (the so-called other crypto-currencies other than bitcoin) over the past 1-2 months, it can be seen that the conversion rate of crypto-currency in bitcoin has changed greatly for a number of coins-they have risen in price to bitcoin, sometimes several times.
On the other hand, the onset of a really deep crisis in bitcoin can undermine the credibility of crypto-currencies in general. Therefore, it is very important that the modernization of the obsolete elements of the program mechanism of bitcoin be carried out, and, moreover, as high as possible. Apparently, the community has realized in recent months that the threat of a crisis is real. Measures to resolve the situation are being undertaken, and one can hope that bitcoin will overcome the crisis in its development.
Let us now turn to a description of the factors that will affect the course of bitcoin in 2017. Potentially more significant factors will be considered first.
The final path for scaling the network.
So, first of all, in 2017, the most urgent issue of the Bitcoin protocol update is likely to be solved. The problem of scaling has long cast a shadow on the position of bitcoin, and on the prospects for its development. In the future, after the reform of the blockbuster is completed, the current period of difficult transactions and price volatility should finally come to an end. After this, bitcoin will enter a new phase of its development.
The problem, however, is that even today the final outcome of the dispute between the supporters of different ways of updating the bitcoin protocol is still not completely clear.
The matter, in a certain sense, is also complicated by the fact that the decision is, in essence, not made by direct vote of the members of the bitcoin community, but, relatively speaking, by "voting through hashed"; In other words, the decision will be taken by bitcoin-miners (more precisely, pools in which most miners are united). The most weighty voices will be the voices of the owners of the largest mining capacities, which, if their position coincides with the position of the leadership of the pool, will strengthen its positions in the voting; Otherwise, the owners of large hashes can go to another pool with a different position in order to use their votes already in its composition. Let's note, by the way, that very many miners can actually entrust their votes to the leadership of the pool because of their trust in them, their lack of opinion on this issue, and even indifference to the outcome of the global dispute over the future of bitcoin. Therefore, the position of the management of large pools is very important.
Increased confidence in bitcoin by regulators, large investors, as well as producers of goods and services.
The expected recognition of bitcoin by a number of states, financial control authorities and large investors will undoubtedly serve to strengthen its price in 2017.
Hopes for the above events are quite significant, although along with the most favorable scenarios, more modest ones can be realized. So, many hopes in bitcoin analytics were placed on the Winklewoss brothers' attempt to register the ETF exchange fund on the Bats BZX Exchange trading floor, in other words, add bitcoin to the American stock market. However, the Securities and Exchange Commission of the US about a month and a half ago rejected the application for the creation of ETF, explaining this is still too high level of manipulation in the bitcoin market.
This turn warns us against excessive optimism; However, the failure of Vinklosov does not cause critical damage to the prospects of bitcoin, and the described decision of the regulator may be revised in the future.
Yet, despite the negative, in some cases, regulatory verdicts, the number of large companies using bitcoin to pay for transactions and carry out transactions is growing - and will no doubt continue to grow. It can be assumed that the share of large and small companies that take bitcoins in payment for their goods and services will also grow. Today, for example, you can travel to the US and some other countries, directly exchanging bitcoins for tickets, food, hotels, etc., in other words, the supply of fiat money in the presence of BTC becomes unnecessary.
International money transfer services, such as Western Union, can also pay attention to bitcoin as a convenient and inexpensive tool for cross-border transfers.
Finally, bitcoin for today is viewed by serious investors as a fairly reliable asset to protect against currency risks. Investors do not care which crypto currency to invest: a number of investors believe that bitcoin is comparable with gold in terms of the minimum risk of depreciation. In addition, there is an opinion that bitcoin has even greater growth potential than yellow metal, especially in the case of any really serious shocks of the world order (military, political and especially financial). And the mobility of bitcoin, as a means of transferring value, is certainly higher than that of physical gold.
Such an attitude not only stimulates the growth of bitcoin, but also can amortize periodic recessions, or, at least, helps it to quickly restore the rate that preceded the recession.
Bitcoin, to a greater or lesser extent, has already been officially recognized by the state in a number of developed countries.
So, in the USA it was recognized as an exchange commodity, and in Japan the bitcoin was recently legalized as a means of payment (the Japanese authorities made such a decisive step practically first in the world).
In Ukraine, thanks to the efforts of the local community and the absence of bans on the part of the authorities, bitcoin has been successfully expanding its positions in recent years. Ukraine a few years ago was among the top ten countries, whose residents actively use bitcoins, now it is already listed in the top five. In addition, the Ukrainian authorities pay great attention to the development of block-technologies.
Against the backdrop of a high level of awareness of bitcoin and a difficult economic environment, many Ukrainians make the decision to invest in bitcoin. The good news for Ukrainian investors was that the EXMO exchange introduced the opportunity to buy and sell BTC for UAH, adding a pair of BTC / UAH to its list of trading directions. The entry and withdrawal of the hryvnia is also available on EXMO, and now it is possible to introduce the hryvnia not only through Visa / MasterCard and Privat24, but also through the convenient payment system AdvCash (the output to which is also available). In addition, you can enter and print UAH through downloading and creating EX-CODE.
However, users from Ukraine and before these innovations were a very significant part of the clientele EXMO. On EXMO all this time Ukrainian miners came to exchange bitcoin for fiat money, and many traders from Ukraine used EXMO to trade crypto currency. This is not surprising, since the EXMO exchange has always had a reputation as an honest and very convenient platform for converting crypto-currency, with fast support and a high-quality API, which is especially appreciated by professional traders.
Financial and political instability
We have already noted that various kinds of instability and risks make the currency of the currency less attractive for large investors, and alternative investment instruments (gold and crypto-currencies, primarily bitcoins) cause them much greater enthusiasm. This statement is also applicable in the case of global sources of instability, and in the case of instability at the national level.
If large investors push macroeconomic instability to bitcoin investments, the negative phenomena in the banking sector and the excessive state control over the movement of capital (primarily in the sphere of cash circulation) are pushing to exchange Fiat for the bitcoin of many middle-class investors. In particular, this is relevant for developed Western countries, where low economic growth rates and the state's propensity to strengthen economic paternalism serve as a source of low interest on bank deposits and increasing pressure on cash.
In 2016, Brexit in the United Kingdom, the devaluation of the renminbi, the confiscation of large banknotes in India and Venezuela, the uncertainty associated with the results of the presidential elections in the United States, inflation in Latin America and other similar events had a clearly stimulating effect on the bitcoin rate. There is reason to believe that 2017 will be no less saturated with such negative and dramatic events.
So, for example, are not excluded:
A) exit from the European Union after Britain and other powerful economies, in particular, France or the FRG, if one of these countries comes to power opponents of globalization (we draw, by the way, attention to the fact that recently Marin Le Pen, an active supporter of France's withdrawal From the EU and NATO, successfully passed the first round of presidential elections in his country).
B) Depression of a number of world currencies and deterioration of economic indicators in the countries emitting them;
(C) Pressure on cash turnover and all kinds of restrictions on it remain a serious problem for citizens;
(D) Finally, the world economy may enter a period of another economic crisis, which will jeopardize the economies of many developed and developing countries, in particular the Chinese economy. The weakening of the yuan and the problems in the Chinese stock market, as in the past year, may well be among the most significant factors in the growth rate of bitcoin.
Bitcoin as a means of payment is in demand among the ever-growing masses of small buyers.
Someone partially or completely leads through bitcoin their business, someone uses bitcoin for cross-border payments without unnecessary restrictions and formalities, for some it is the most convenient and profitable way of paying for goods or sending money, and, finally, there are people who This currency is like because it corresponds to their worldview.
Note, however, that among the broad masses, especially in backward countries, many still do not use bitcoin, but not because they do not need it, but because potential consumers do not know much about this fundamentally new form of money. Therefore, the reserves of expanding the bitcoin-audience are still very large now.
As potential users turn into real ones, their bottom-line, but very massive demand for crypto currency becomes more common. The demand for an asset, naturally, is directly proportional to its price, so the growing number of users leads to a general rise in price of the asset.
Let us also note that in the future, the bitcoin production rate may be lower than the rate of its withdrawal from the turnover due to long-term investment (hoarding), which will mean a reduction in the market supply, which again potentially increases the price.
Finally, as is known from economic psychology, inflation expectations alone can serve as an additional source of inflation; If we consider this phenomenon in relation to the bitcoin rate, the very expectation of an even greater price increase may serve to increase the demand for bitcoin (in this case, the phyto price of bitcoin inflates, because bitcoin is a deflationary currency). Such a demand can be due not only to a desire to better increase their money, but also fear of not having time to "jump on the train," especially during periods of explosive growth.
Bitcoin as a payment system will become easier, more convenient and more legitimate this year, which will additionally increase the number of new users.
This clause follows the previous one: simplification of work with BTC is very important for small consumers of innovative currency, technically often not too "advanced". Greater comfort, however, is important for many investors of a higher level - even among them there are those who have not yet fully mastered the specifics of working with crypto-currencies and their software.
In 2017, the creators of SegWit promise (if their update is supported by the miners) to launch the "superstructure" of the Lightning Network, which will allow those who want to spend cheaper "off-grade" payments in bitcoins (thanks to which the BTC will receive an addition with a principle of work remotely reminiscent of this principle At the plastic card).
At present, carrying out transactions with small amounts of BTC is complicated by the fact that the commission of payment is from 0.00050-0.00070 BTC (so, for a transfer amount equivalent to the dollar, the commission will be at least 50% of the transfer amount), and even if sufficient payment is made Commission transfer may be delayed if bitcoin-blocks are badly "dug out" at the moment or if the network is overloaded.
"Second level systems," like the Lightning Network, are designed to seriously mitigate both the problem of inconvenient micropayments, and the unimportant bandwidth of the network as a whole.
Developers promise other network-improving applications, many of which are ready for integration into the system.
The prevalence of conventional plastic cards nominated in bitcoins will also increase; The same can be said about the bitcoin-ATM, which allows you to directly exchange Fiat for bitcoin. All this will increase the availability of bitcoins for ordinary users and, therefore, will contribute to price growth.
The introduction of clear state recommendations on work with bitcoin (in particular, for crypto-exchange exchanges and large companies) can increase the legality of the legal status of bitcoin (up to its full recognition by the state), which is very important for both large investors and ordinary people with caution To all financial instruments that are not sufficiently protected from the legal point of view. On the other hand, increasing state control over bitcoins beyond reasonable limits can become unpleasant news for people who are not related to big business and who value in bitkoin the possibility of gaining financial freedom and financial inadequacy to any authorities.
The massive recognition of the prospect of blockage in 2017 can also indirectly strengthen confidence in bitcoin all over the world (in this case, it is not about blockade of bitcoin, but about "blockade in general", ie, technology of distributed storage and processing of data). Many banks, attracted by the reliability and high stability of the detachment as a method of data storage, are working on integrating the blockhouse into their service systems. In addition, American businessmen, trading in futures, and a number of insurance companies are going to integrate the block into their business.
The use of blocking for more perfect and transparent government is already being collected in some countries; There are, for example, plans for organizing elections with the help of a blockbuster.
Problems that bitcoin may face
In the current year, as noted above, one of the most serious problems will be the achievement of consensus in the reform of the bitcoin protocol, and the desirable avoidance of the split of the network.
If the reform of bitcoin does not happen, then bitcoin can enter a crisis state. However, it is much more likely that an update will occur, and a difficult period will be overcome.
What other problems and trends can negatively affect the ecosystem of bitcoin and reduce its course?
A) The Chinese authorities can additionally check and tighten control "make life difficult" not only for exchanges that convert currency, but in general for all users of crypto-currencies in the PRC (in principle, such threats are not ruled out in any other country, Trade and circulation of bitcoin are combined with negative tendencies to strengthen control). In the most negative scenarios, the authorities of the People's Republic of China may include in the "Great Chinese firewall" the cut-off of transactions related to any crypto currency. This will not only completely transfer the center of gravity of the world crypto-economy outside of China and reduce the demand from investors from the Middle Kingdom, but also to some extent affect the course of bitcoins.
B) The possibility of hacking one of the major bitcoin exchanges (or other critical crypto-currency resources) is not very high, but it is also possible. However, the measures to protect them have become, perhaps, more perfect than in 2016, when the Bitfinex exchange hacking nearly overturned the bitcoin rate, and not only for a long time reduced it by 15%, but also served as a reason for delaying the large growth that began only after 2 months After hacking.
C) It is even less likely that due to the sharp growth of one of the promising altcoyins, there will be a serious outflow of funds from bitcoin, or that the efforts of the "bears" in the drawdown of the course will lead to a really long decline in it. Yes, investors who decide which foreign currency to invest in are often chosen by the Altcoy because of their hopes for their multiple growth, but these hopes very often do not come true, or even turn into a loss. Investments in bitcoin are much less risky than buying advertised altcoyins.
The probability of a really serious impact of one of these problems is not particularly great, but it can not be discounted. The most likely thing is that the positive trends of bitcoin development will outweigh those threats that will take on a visible appearance.
D) The high volatility of the bitcoin rate (due to still serious speculative activity and strong market reaction to significant news) may also serve as a source of periodic fluctuations in asset prices, but the volatility factor only indirectly affects the overall trend of the BTC price increase. It can be assumed that as the situation of bitcoin stabilizes after the expected updates, volatility will decrease, and this will increase confidence in bitcoins by serious investors, which will result in an additional price increase.
Analyst bitcoin noted that, following the results of March, high volatility of bitcoin inspired certain concerns: if volatility did not come to naught in April, then large traders could reconsider their positive expectations, and the price in that case could hardly be kept at a high level . However, stability has come to the market, which was not very redundant this month.
In general, the speculative component of the volatility of the BTC exchange rate will most likely decline as its price and overall capitalization grow. For stability and general prospects of the crypto-currency economy, this has a rather positive significance.
Summarizing, we can say that, judging by the sum of negative and positive trends, the prospects for growth of the bitcoin rate are rather encouraging.
Source : http://newscryptocoin.com/2017/05/05/топ-6-факторов-которые-повлияют-на-цену/
Very thorough look at the key factors influencing the Bitcoin price this year!
I want to see the scaling issue sorted as soon as possible but I don't have much confidence that it will be solved this year. What makes you think it will be in 2017?
It's just a guess !)
Very good blog. Interesting to see I'm not the only one that is thinking about this. The cryptospace definitely feels a bit inflated. However we also said that about the S&P 500 40 years ago Besides coinmarketcap.com there is: https://www.coincheckup.com I'm really happy with this site that gives complete coin analysis for every single crypto. For example: https://www.coincheckup.com/coins/Bitcoin#analysis To check Bitcoin Investment analysis.