As you know, we’ve been blogging about some serious bad issues that have come up with regards to Bitcoin recently. Whether it was the known flaw going around that caused MtGox and several other Bitcoin Exchanges to shut down to the news that Silk Road had around $2.7 USD million worth of bitcoins stolen from their wallet, things haven’t been looking too great for the cryptocurrency. According to a piece in Newsmax, some people think that Bitcoin is headed toward another busy week – with more potentially bad news around the corner.
Earlier this morning Sean Hyman wrote a post describing some of what’s been happening with Bitcoin as well as his predictions on where it’s going to be heading next – a value of $250 to $500 per BTC according to him. And while Bitcoin is currently trading higher on that on some exchanges, Hyman makes a lot of sense when it comes to why he thinks that the Bitcoin value may fall a little more before stabilizing. We’re going to take a little look at some of the things he talks about to try to make sense of them for you.
Regulation of Bitcoin
While it’s not regulated at this time, in order for Bitcoin to become more mainstream and work together with banks and other financial institutions, it’s going to have to be regulated more. And when this happens, there’s a good chance that the people who support Bitcoin right now will stop supporting it because it became the type of monetary system they were against in the first place. No one is sure exactly how many bitcoiners are currently in this group, but there’s a good chance it’s substantial.
Rejection of Bitcoin
A lot of nations around the world – including China, Vietnam, Canada and others – have rejected Bitcoin and are trying their hardest to work against it growing and becoming more popular. In some cases, it has been deemed illegal in some regions of the world. While the United States hasn’t officially taken a stance yet, there’s a good chance the U.S. will be pushed into making a move eventually. Whether it’s for or against Bitcoin remains to be seen, but there’s no denying a lot of money is at stake.
It’s true that Bitcoin lost a lot of value after China rejected the cryptocurrency, but it managed to bounce back and hit a high in late 2013 – reaching over $1,000 per BTC on some exchanges. However, that price has since went down and has been holding around $600 per BTC on most exchanges for a while. If you notice, the value has dropped considerably more on MtGox Exchange – what was once considered the gold standard for BTC value – a position that has been taken over by Coinbase according to many.
Anyway, back when it was at its peak, there were over a million transactions per day! That’s quite a few transactions by any standards. Now, however, with the lower prices and problems with the Bitcoin network, transactions are down to tens of thousands per day on average – considerably lower. Hyman goes on to talk about Apple removing a lot of Bitcoin Wallet apps from their Apple App Store – a move that can definitely have an effect on how many people are using Bitcoin on a daily basis because the Apple iPad and iPhone are both very popular.
The problem we see with Hyman’s calculations are that he’s using financial predictions based on study of the stock market – which is very different than the Bitcoin marketplace online. Because of this, there’s a good chance that he’s up in the air as much as the rest of us when it comes to determining where Bitcoin value will eventually land and stabilize in the weeks and months ahead. Still, all isn’t doom and gloom. People are still making money with Bitcoin and are still holding onto it, hoping that it again rises in value.
If you have any personal opinions about whether Bitcoin value is going to go up or down in the upcoming weeks, we’d love for you to write a comment and let us know why you think it will go one way or the other. When it comes to a relatively new technology or financial system like Bitcoin, it’s important to remember that there will be good days and bad days. Additionally, if you join the people who are selling off everything, there’s a good chance you’re going to miss the profits if and when Bitcoin decided to turn around and stabilize or even grow a little.