Bitcoin continues its incredible bull run, breaking the $900 USD mark and reaching an all-time high in market cap value of over $14 billion.
Bitcoin Market Cap at All-Time High
Driven by global economic and political uncertainty, Bitcoin has had an amazing run since the beginning of 2016, earning the title of the best-performing commodity of 2016. In fact, Bitcoin is now bigger than Silver, SpaceX, Dropbox, and Twitter by market cap, according to Brave New Coin.
The $800 USD mark went as fast as it came for Bitcoin, which is now sitting at around $910 after a 5.70% increase in the last 24 hours. China has driven the rally with over 7.9 Million BTC traded in the last 24 hours, as the Chinese Yuan continues to devalue, forcing citizens to look for a safe-haven asset.
Although the price has been higher before, Bitcoin is now boasting its all-time high market cap of around $14.59 billion.
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Bitcoin’s Deflation vs. Dollar Inflation
Perhaps one of the most defining features in Bitcoin is its issuance mechanism. It is predictable and finite, meaning that we know exactly how many Bitcoins are issued in any given time period and we can be certain that no more than 21M Bitcoins will ever exist.
This contrasts with most national currencies that rely on a debt-based issuance mechanism, where money can be printed at will and ‘injected’ into the economy via banks, which is supposed to devalue the national currency.
Furthermore, Bitcoin’s global and decentralized nature make it somewhat immune to political factors, given that its use and issuance is not restricted to any country. It is apolitical, borderless and the first money than can be considered truly global.
Indeed, Bitcoin thrives in the face of political and economic chaos, which threatens the integrity of the world’s financial system. This further underscores Bitcoin’s value as a safe-haven asset.
What’s Driving the Price?
Several factors have influenced the price since the beginning of the year. For one, there was the second halving in June, which reduced the Bitcoin block reward from 25BTC to 12.5 BTC.
Then there is global economic uncertainty. Countries where inflation has set in, have seen an overwhelming increase in the demand for Bitcoin during 2016 as citizens try to escape the devaluation of the currency and seek shelter with Bitcoin.
This growing interest can be seen not only in trading volumes that have increased exponentially in countries like India, Venezuela, and Nigeria, but also in internet searches and news coverage reports on Bitcoin, which are becoming increasingly commonplace.
Italy’s Bank Bailout, China, Trump…
The recent surge in the price is surely bringing joy to every Bitcoinist this Christmas as a combination of various events across the world may have stirred up the perfect storm.
Accusing China of currency manipulation, Trump threatened to apply a 45% tariff on Chinese imports, which has weakened the currency further, forcing the population to seek safety in Bitcoin, also known as ‘digital gold.’ In fact, Bitcoin may even be gaining favor over gold, given the recent restrictions on Gold imports applied in China.
China is also the biggest driver of price since the biggest chunk of bitcoin trading is in CNY. However, not everyone buys into this widespread opinion. Civic CEO Vinny Lingham notes that price is starting to reflect the drop in supply since the halving.
The pundits that think China drove Bitcoin surge from $800 to $900 are wrong. It was a hollow supply interval on the supply/demand curve.
— Vinny Lingham (@VinnyLingham) December 23, 2016
Additionally, lack of trust in banks and in the governments that support them is at its lowest, as yet another bank bailout will take place, this time in Italy. Prime Minister Paolo Gentiloni has announced the approval of €20bn state bailout for the country’s third-largest bank (and the oldest bank in the world) Monte dei Paschi di Siena. EU rules now dictate that banking investors will now bear some of the costs of rescuing troubled banks alongside the taxpayers.
Recent tragedies like the assassination of Russia’s envoy to Turkey and the attack that killed 12 people in Berlin further accentuate the political uncertainty that can further boost Bitcoin by forcing wary investors to seek alternative safe-havens.
Finally, some nations are also giving serious motive to their citizens to seek exits. In a fear for their savings, people in countries like India, Venezuela etc. are increasingly looking for new ways to avoid falling prey to failed economic and demonetization policies.
Since global economic turmoil is expected to continue, our only suggestion here at Bitcoinist is that your bits are properly secured during this moonshot.
Do you think the Bitcoin price surge will continue in 2017? How far will it go?
Images courtesy of shutterstock, coin.dance, Bravenewcoin.com