The year 2016 has been a great year for Bitcoin. Apart from the few instances where the cryptocurrency network’s mempool was flooded with unconfirmed transactions due to increased activity, it has exhibited a great performance in the price front.
Specifically in the recent days, Bitcoin price has been on an upward rally owing to various political and economic factors. Some of the recent events that might spell good news to the Bitcoin ecosystem includes: the predicted fall of Chinese yuan; the failure of Italian Constitutional Reforms referendum which could result in Italy’s potential exit from the European Union; India’s demonetisation drive, followed by a similar decision taken by Venezuela.
Kyle Bass’ prediction of Yuan falling by about 30 percent in the near future will have a significant impact on the digital currency, irrespective of whether it really happens or not. On the other hand, the current political situation in Italy is going to further contribute to the economic woes of the country. Major Italian banks are already in the red. The banking sector had high hopes riding on constitutional reforms, which would have helped the government to step in and introduce few radical changes. However, the “No” vote in the referendum has made it difficult. These changes have now given rise to speculations of Italy soon following Britain to leave the European Union. If the situation does arise, then the failing banking sector, minus the Euro safety net will make Italians opt for alternative assets like Bitcoin (if they haven’t done it already).
The government of Venezuela’s latest action to withdraw 100 Bolivar banknotes from circulation seems like a page borrowed from India’s book. The government believes that their decision would put a lid on mafia activity. However, the impact may turn out to be much worse, especially in the current economic situation. Many Venezuelans have already moved on to Bitcoin after the falling Bolivar stopped showing any sign of recovery. The impact of the sudden withdrawal of currency notes from circulation has already been seen in the Indian economy.
India, after its much publicized “demonetization” move, has seen a drastic slowdown in the manufacturing and consumer sectors. With businesses witnessing about 90 percent fall in earnings, the country’s GDP has taken a hit. This suddenly increased interest in Bitcoin among Indians, leading to over $200 increase in the cryptocurrency’s price within the domestic market. A similar trend is expected from Venezuela as well.
The recent Bitcoin price trend chart shows a constant upward movement of prices since the past few months. Combining all the above-mentioned factors with the upcoming holiday season, demand for the most popular digital currency is only going to move upwards. Presently, the price of 1 BTC is close to $780. If lucky, we could see it touch $800-850 at the beginning of 2017.
Ref: BBC | CoinMarketCap |Image: Shutterstock