The last couple of months have been nothing short of incendiary for digital currency users throughout the world. Following Bitcoin’s massive increase to $20,000 in 2017, the coin has been facing large volatility ever since. A few days ago, the bitcoin price managed to rebound more than $1,000 in less than 24 hours, after its price increased from $6,900 to over $8,000.
Economic analysts have found plausible reasons for both the decrease and increase in price. To kick things off, the price fall sustained until now, can be attributed to fear-selling, tax liability and regulatory changes. Tax liability is a bigger issue than people expected at first, considering the fact that the large price increase created massive short-term gains, which are taxable by the Internal Revenue Service (IRS), in the United States. With $590 billion in value created in 2017 alone and U.S. holders capturing roughly 30% of value growth, many had to sell in order to keep their taxes in check, and avoid any issues with the IRS.
The decreasing price then led to fear-selling, as many thought that prices were bound to go even lower, and sold as an effort to keep at least a part of their profits. The more bitcoin is exchanged to fiat, the more likely it is for its value to go down even further. Regulatory changes haven’t made things easier, as legislation is still fairly confusing, and crypto users throughout the world are facing uncertainties when determining whether they own anything in tax, and if yes, how much. Pressure in Asia has also been an important factor in driving the price down.
Luckily, recent events have led to an increase in cryptocurrency prices, as numerous predictions on the positive future for the crypto market have been made. Based on this, most economic analysts believe that bitcoin and other digital currencies will be welcoming monster gains during the next couple of weeks. For instance, the tech billionaire, Tim Draper, stated that he believes a $250,000 price for bitcoin is achievable by the year of 2022.
Additionally, the CEO of the Atlas Quantum investment platform mentioned that: “Bitcoin deflationary characteristics are an indication that in the long run, the market is bullish. We believe the price could be set to go up and has the potential to reach December 2017 levels again.”
Based on everything that has been outlined so far, what are your thoughts on the future of the bitcoin price? How about the other digital currencies? Let us know in the comment section below.