DUBAI: Bitcoin prices are now reacting to real world problems such as trade wars among others.
In 2017, the parabolic rise in Bitcoin prices was speculative in nature, more do with the Fear Of Missing Out syndrome, But in 2019, fundamental factors such as trade wars triggered by the United States on China, Mexico, Canada and India along with potential launch Bitcoin futures on US bourses are impacting the prices.
“One of the reasons that Bitcoin has seen such a rise is due to the trade war between China and the US, which is impacting economies. So during turbulent times Bitcoin is always proven to be a safe haven compared to gold or other safe instruments. Bitcoin has always demonstrated to be very strong during economic turbulence. With people’s concerns on the Chinese Yuan, and the dollar, people are flocking to Bitcoin,” Jason King, Chief Executive Officer at CGS Group, Managing Director of MENA at aelf told Gulf News.
Bitcoin prices are slowly and gradually rising at a rapid pace, similar to its initial rally that happened in 2017 and that matured in prices of the cryptocurrency hitting $20,000 (Dh73,454) in December of that year. In 2017, the rapid rise from $9,000 to $20,000 was within a span of a month. So will Bitcoin witness a similar parabolic rise this time around?
“History never repeats itself, but it shows resemblances. This kind and parabolic rise and drop has occurred 8-10 times in Bitcoin’s history. But each time the only difference is that more and more people are participating. That’s a good sign,” King said.
So far in the year, Bitcoin prices have jumped two and a half times from $3,689 to near the keenly watched $10,000, a level last seen in March 2018. The Marketcap of Bitcoin has jumped many-folds from a low of $57 billion in December 2018 to $167 billion now. The marketcap touched a peak of $300 billion in December 2017, when prices hit a peak of near $20,000.
In a first of many, Harvard’s $37.1 billion endowment fund has reportedly invested $12.65 million in Blockstack, the New York-based blockchain toolmaker. Financial services giant Fidelity Investments is said to be launching cryptocurrency trading service soon.
“Over the next few years, we would see central banks, sovereign wealth funds and nations buying bitcoin. People compare Bitcoin with digital gold. If you have a brick of gold right now, it is difficult to show the physical validation. Even though it’s a liquid instrument,” King said.
“The participation in Bitcoin is increasing at an exponential rate, and that for any industry is very bullish as we have seen demonstrated for smartphones, and email and the internet,” he added.