Bitcoin price is rising slowly but steadily. Over the las couple of months the price for each individual bitcoin has seen a staggering rise, from ¥40,000 in January, to close to ¥64,000 in just shy of 5 months (from 380 USD to close to 600 USD). This is of course a great thing for every bitcoin user, both for the debt holder and the lenders. As counter intuitive as this might seem, a steady rise in bitcoin prices (as opposed to a fast exponential growth) indicates that the market is hungry for bitcoins, or a more direct way to say it, bitcoin usage and adoption is growing. This fact in turn means that bitcoin it is set to maintain or increase its value as a currency and not going to just be forgotten quickly making all bitcoins lose all of its value all of the sudden.
As a bitcoin entrepreneur or even as a normal everyday user, it is important to recognize trends and patterns to know when it is better to buy, sell or simply hold on to your bitcoin. As of January 8th, 2016, the price of each individual bitcoin its set at ¥62,000 +/-1000 along all mayor bitcoin exchanges. However the price is failing to hit the ¥65000, which many speculators and analysts forecasted for the months of June and July. All of this is to be expected as the global trend towards selling continues and the price rise continues to slow down. If this trends continues, as with any financial market, unexperienced users will sell their bitcoins fearing that they will lose their investments or their profits, furthering the stagnation or drop in the price. This kind of reaction occurred yesterday, June 7th when the global price dropped from 585 USD to 570 USD in a matter of minutes. However, the price for BTC is once again showing signs of movement towards the ¥65000.
Another factor in bitcoin price is the stability of the bitcoin flow, which is about to change. As of today, there are an estimated 32 days left until the scheduled halving of the bitcoin reward for miners (from 25 to 12.5 BTC). Back when the first halving occurred the prices sky rocketed in a seemingly vertical fashion. This skyrocketing of prices occurs simply because the growth of bitcoin use is suddenly met with lower production and a lower flow of new bitcoins, making the ratio new users-bitcoins produced even bigger. None the less we probably won’t see such a dramatic increase due to the fact that back then the block rewards halved from 50 to 25 BTC (a difference of 25 BTC) while now we will see a difference of merely 12.5 bitcoins.
Finally, one important point concerning mainly Japan is the recognition of Bitcoin as a currency in the country. Because of this, and merely because of the press that bitcoin is having as a consequence, more businesses and people will adopt bitcoin inside japan, this in turn means that japan based exchange’s will start to see a higher volume of trading and a higher rate of users. This last point, combined with the incoming halving of the block reward means that the demand for bitcoin (mainly inside japan) will be higher than ever soon enough, but with the reduction of the block reward this demand will be met with lower production of BTC, as a consequence, rising the prices even more. One important factor to consider is that along with the new regulations and usage, the volatility of BTC in the Japanese market will decrease (this doesn’t mean that BTC will be as stable as fiat currencies, but rather that it will be less volatile inside japan) affecting likewise the global scene.
All things considered, the price for bitcoin seems that it will not suffer from any sort of important decrease in the near future, but in contrast an increase in its price looms ahead, among other things, due to the halving of the block reward. Because of previously discussed scenario, it is advisable to invest in BTC now, before the price takes a sharp (and expensive) turn. Weather this halving has the effects that had when it first happened is debatable, but it will certainly bring about a stronger and more expensive BTC.
General prices of BTC are on the rise and its adoption is following along, making it an ideal moment to add BTC to your wallet and to hold on to them. Further analysis closer to the block reward halving will be more decisive and clear in the weeks to come and will more accurately predict the scenario that the BTC market might face in weeks to come.
By Federico Olivares