Blockchain: Bitcoin price

Over the past month, many reports about the materialization of a potential “death spiral” on the Bitcoin network were released, leading investors to be concerned about the short-term trend of the dominant cryptocurrency.


According to a security expert and cryptocurrency researcher Andreas Antonopoulos, a death spiral is unlikely to happen in Bitcoin.

Let’s first take a look at some of the factors that affect bitcoin’s price and their impact.

1.Regulation

After Bitcoin hit its all-time high of near $20,000 in December last year, regulators and authorities moved in to regulate the young industry. Their motive for the regulation was that the whole industry was nothing but a scam. China and South Korea were on the forefront of cracking down on the crypto industry.

Initial coin offerings were banned and mining operations and crypto exchanges were shut down. Investors panicked. China and South Korea are a very important market for the crypto industry. At some point, around 70 percent of the world’s bitcoins were mined in China. Banning Bitcoin mining and cryptocurrency operations obviously negatively impacted Bitcoin and its price fell significantly.

Fast forward today and the regulatory is a bit different. South Korea is drafting a new blockchain classification system that would legitimize cryptocurrencies.

In recent weeks, China has also shown signs of warming up to cryptocurrencies.

These two factors can play a huge role in seeing the price of bitcoin going up.

2. Supply

Bitcoins are a finite source. As its supply decreases, so will its price increase. Its supply will also be restrained by the increasing costs of mining Bitcoins.

Those in the know-how say that Bitcoin’s price is always 2.5 times higher than the mining costs.

Tom Lee, a Wall Street strategist who is bullish on Bitcoin, predicts that Bitcoin has the potential to reach or surpass $20,000 by year-end.

3. Investments in Bitcoin mining

Bitmain, the largest company that manufacturers ASICs or specialized equipment for Bitcoin mining continues to receive funding from investors and is even considering an IPO so that its early investors could cash out.

I doubt that the investors can fork out their money if they think that the value of Bitcoin will go up.

4. Acceptance

Though Bitcoin has some flaws that limit it from being a mainstream currency, its adoption by several merchants will drive its price higher.

Many companies are now accepting Bitcoin as a form of payment.

5. Media coverage

In part, bad publicity affects Bitcoin’s price. As many governments continue to accept the crypto market, the good news from the media plays its part in driving Bitcoin’s price high.

When will this happen?

I can’t give you an estimate of when the price might reach $10,000. I think that once the regulatory frameworks from several countries are put in place (especially S. Korea and China), Bitcoin’s price will start to go up.

I am of the view that by the end of the year, Bitcoin might be trading somewhere between $11,000 - $14,000 per unit.