What’s happening to the price of Bitcoin?
Bitcoin stole the headlines in late 2017 after prices rapidly began to rise in mid-November.
Since then, conversations around the globe have frequently featured the words, ‘what’s happening to the price of Bitcoin?’, as people try to second-guess what will happen next and how the price will change moving forward.
Bitcoin gains unprecedented levels of fame in 2017
Throughout 2017, the price of a single bitcoin grew steadily as interest in the digital currency increased. Suddenly, after a dip in November, the price hiked and people rushed to buy.
Bitcoin figures looked like this over the course of a few short weeks:
- Mid- November – $7843.94
- Late-November – $9916.54
- Early-December – $16,858.02
- Mid-December – $19,343.04
December 2017 will be remembered as the Christmas that all eyes were on Bitcoin.
Why is the price of Bitcoin volatile?
Today, Monday 12 February 2018, much is being published online about the continuing ‘yo-yo’ (source City A.M.) effect of Bitcoin after prices started to rise again over the weekend.
City A.M. comments that ‘the price dipped back below $8,000 on Sunday morning after briefly surpassing $9,000 earlier on Saturday’, while CoinTelegraph quotes that bitcoin prices closed ‘the past seven days at $8300, having slid to a low of $6111 Feb. 6 before peaking at $9109 on Saturday, Feb. 10.’.
The question on many people’s minds is… How can a currency survive crazy fluctuations like this?
Easily, is the answer.
Bitcoin has experienced price rises and drops since the beginning. As a cryptocurrency, Bitcoin lives in the middle of an emerging industry, so it’s naturally to be expected that the market will experience massive turbulence. CryptoDaily highlights that ‘cryptocurrency only seems to be growing and given a few more years may be firmly integrated into society’ – that’s the important point to remember about Bitcoin. Neither it or the industry it connects with have been normalised in our everyday society, yet. Bitcoin only went mainstream in 2017. This means that until it’s had time to grow and blossom into something familiar and widely-used, prices will continue to rise and fall, and people will hold concerns.
Why does the price of Bitcoin change so much?
Aside from being a new technology, how Bitcoin is assigned value plays a huge role in the extreme price fluctuations.
Bitcoin is a store of value, similar to the pound sterling, dollar and euro (fiat currencies). Crucially, it’s ‘tradable and can be stored for future use’. This element is helping to increase its appeal to more and more people.
As with the fiats, the value of Bitcoin is determined by its perceived value. Perception has a great effect in influencing changes in the price, particularly as ‘Bitcoin’s value can swing based on news events much as we observe with fiat currencies’.
Earlier this month it was announced that Lloyds Banking Group and Virgin Money have introduced changes to ban customers from using credit cards to buy bitcoin. This added to the existing storm around Bitcoin and likely contributed to the depreciation in price seen on February 4 to 6. Despite this though, the price of Bitcoin continued to yo-yo and as explained at the start of this article, has since risen again. What this clearly demonstrates is that public feeling runs in tandem alongside price changes and market volatility.
On a side-note, Business Insider recently reported a list showing the credit card position of the top banking players in the UK, and interestingly, more banks are allowing credit card bitcoin purchases than not. Barclays, Royal Bank of Scotland, TSB, Natwest, Santander and HSBC are the names of those still allowing customers to buy bitcoin on credit. So, panic not.
Bitcoin, regulation and price
Lifehacker argues that ‘government regulation could help stabilize Bitcoin’. At the moment, the regulatory expectations of Bitcoin vary from country to country.
Despite this, the fact that regulation varies from country to country means that the perception placed on Bitcoin varies too. It’s back to understanding that our perceptions contribute to the value, and therefore, help to create the changes in price.
What’s the real headline about Bitcoin prices?
‘Bitcoin is here to stay’ is our ultimate take-away.
It’s normal for the price to fluctuate and for people to feel concerned, but what should be remembered is that the underlying technology is transforming the financial world and how we perceive money.
Looking to buy or sell bitcoin? Get started on your bitcoin journey here.
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