A look at the Bitcoin price and the blockchain ecosystem opens up a field of tension between long-term innovation and short-term speculation. What are the prospects for the long term?
Bitcoin course in a field of tension
The Bitcoin and crypto market as well as the blockchain technology face a contradiction that is repeatedly reflected in the high fluctuations in the Bitcoin share price. We have long-term technical innovation on the one hand and slightly overheated, emotionally-driven speculation on the other. While crypto projects are (ideally) designed to optimize processes and bring about technological and social change, trading is often about making short-term profits.
The best example of such tensions in recent weeks has been China. The Middle Kingdom announced through Xi Jinping on 25 October that it would invest more in research into blockchain technology. The President of the Communist Party did not mention Bitcoin at all. Nevertheless, the news was enough to catapult the Bitcoin share price up by 40 percent in the short term. The result was a medium FOMO wave that reached the crypto community – quickly buying BTC before it’s too late was the order of the day.
In the meantime, the wave has abated again, and the Bitcoin price oscillates between 8,000 and 9,000 US dollars. China’s blockchain plans are unbroken. However, the short-term hype has not yet turned into a bull run. The reason: long-term developments face a nervous market. There are plenty of reasons to put on long glasses at the Bitcoin price.
Bitcoin price forecasts: Stock to Flow & Co.
First of all, you can rummage through all the bullish analyses that dominate the market as much as Bitcoin death ads. For example, there is the stock-to-flow ratio, which already sees the Bitcoin share price at 250,000 US dollars next year. Although it is not entirely prudent, it sometimes overlooks important factors. Nevertheless, it refers to the scarcity of “digital gold”. After all, regular halving reduces the supply of the digital currency by half, which at least in the past coincided with increases in the Bitcoin exchange rate. Although the crypto glass ball is still a long time coming, halving is definitely an indication of a rise in the exchange rate.
A recent study by Chainalysis confirms this bullish view. Thus the Bitcoin price in the coming year could depend the 500 largest US stock exchange companies in performance questions. Here, too, the significance of the study may be doubtful, as it is based on a selected circle of investors. Nevertheless, it assumes an important possible Bitcoin price driver.
After all, the analyses have one thing in common: they assume that the technology will be disseminated. If you take a look at the crypto market, there are some clues.
Adaptation as price driver
Crypto-depositary Bakkt is playing a leading role here. The company is not only planning to carry Bitcoin to the coffee house counters of Starbucks. The New York-based company is also opening up to a much wider audience. The Bakkt Warehouse has recently been opened to non-futures traders. Visa Travelcard users for the Asia-Pacific region will also be able to pay directly with Bitcoin.
Further distribution tendencies of the decentralized technology can be seen in the Bitcoin exchanges. Last week, the Argentine branch of the Huobi crypto exchange decided to build a USD 100 million data center in the South American country. After all, Bitcoin & Co. have a good standing especially in countries with economic problems – Venezuela is a prime example.
In Thailand, on the other hand, an amusement park found its way onto the chain using Security Token Offering. The blockchain tracking of raw materials is also finding its way into the middle of society, and around one in ten coffee farmers in India now uses the blockchain. The US Department of Homeland Security recently discovered the technology for itself. The US security authority wants to use the blockchain to monitor oil and gas imports from Canada, for example. In addition, J.P. Morgan and the Central Bank of Singapore are testing the technology to track payment flows.