A small rise in the bitcoin price is giving enthusiasts new hope. While the rise only constitutes about two dollars, the long-running theme of a bullish trend in the bitcoin market appears to be coming true.
Bitcoin Price: A Long History of Deflation and Volatility, But That’s a Good Thing
“Price has been pretty volatile over the last few days, and with this volatility has come plenty of opportunities to get in and out of the markets according to our intraday strategy. Overnight last night, however, things settled down a little… We saw a spike a little earlier today, and this spike has carved out a pretty nice range (after initially completing a breakout pattern), and so we know that volume, even being low, can move the markets.”
The present move appears to be leaning towards an uptrend. However, there are other analysts that predict bitcoin could still enter bearish territory in the coming weeks. One source explains:
“Bitcoin price looks to be slipping from $600 and 4,000 CNY in some exchanges. Failure to hold this critical level opens the possibility of another corrective wave of decline.”
Overall, however, the prognosis appears to be good. In just the last five years, the inflation rate of bitcoin has dropped massively from between 30 and 50 percent, to about four percent in 2016. The numbers suggest that the adoption rate of bitcoin as the world’s number one cryptocurrency is rapidly speeding up.
Of course, one of the biggest contributing factors is that bitcoin is classified as a deflationary currency. A decreasing inflation rate is coded into the protocol, with block rewards periodically cut in half, slashing the growth rate of bitcoin’s supply. This has contributed to the coin’s volatility, which in many ways, has allowed it to become such a force in the monetary arena.
Author Matthew O’Brien offers his take on Bitcoin:
“Bitcoin has a massive deflationary bias. Its money supply is mostly fixed, but the menu of things it can buy is growing. The same amount of money chasing more goods means money will be worth more. Or, put another way, prices will fall in Bitcoin terms, and that’s why it’s not a currency, and won’t be one until it has a central bank.”
But bitcoin is a currency, and it’s been a particularly high-performing one for several years. By 2015, it had experienced a market value increase of 5,992 percent since its debut 2009, and while stability has always been a desired point in bitcoin’s history, its volatility has certainly helped to push it forward, and will likely continue to do so.
Will bitcoin continue to shoot up? Post your comments below!
Image courtesy of LAMCO Advisory Services, Shutterstock.