The price of BTC shot up last spring, but the fire quickly petered out. Is this upshot we’re seeing now any different?
One way or another, Bitcoin isn’t going away and is growing. Its history and low market cap suggest that its next upward move, when that happens, will be swift and incredible.
The history. Bitcoin price has always moved in leaps and bounds. Primarily because it is purely speculative at this point. Very little commerce occurs using BTC and what does occur is often driven by enthusiasm for the tech, not actual convenience. Speculators pour money into and out of things all the time, Bitcoin is no exception.
The market cap. Bitcoin is essentially a penny stock at this point. A few millionaires decide they want to convert some of their wealth into BTC, the price is affected dramatically. One billionaire latching onto Bitcoin, at this early stage, would send the price skyrocketing.
Here is a graph of the price of Bitcoin leading back to 2012 when it was less then $10 on Bitstamp, an American exchange.
If you don’t know how these graphs work, here’s the simple description. Red indicates that there were a lot of people selling their Bitcoins, green means there were a lot of people buying. The line along the bottom represents the volume of trades. The top line graph represents what the trading price was.
You will see 2 significant spikes in Bitcoin’s price already. May 2013 and Nov 2013. If you were to zoom in closer, you’d also see a spike when Bitcoin’s went from being worth pennies to shooting over $13.
Also, note that after the May 2013 spike, the price dropped and settled to around $100-$200 and stayed there for some time. Now even though 2014 was one long drop, 2015 has shown a stable price of between $200-$300. So I’d say its reasonable to assume that when it spikes upward the next time, it will go even higher, since its starting from a stable price that is 3 times as high. Whether or not this fall’s price increase is that start of that upward spike, remains to be seen….BUT…lets have a quick look at that volume graph I mentioned at the bottom again, but this time on a Chinese exchange, Huobi.
For whatever reason, volume of buys in China is unprecedented right now. Off the chart (not literally – please refer to chart). This is entirely unlike last spring when the volume remained steady.. . .And this is buy volume (green), people are buying a ton of bitcoin in China right now.
Also, note the prices at the top. Consistent now for weeks through this price rise, Chinese exchanges are trading Bitcoin for 10% more. The rest of the world follows along behind them in the upward trend. They buy and push the price up in China, prompting the price to rise everywhere else. Then the Chinese traders see everywhere else go up, so they feel its still undervalued and are probably prompted to buy more. When the exchanges go out of wack with each other, a vicious cycle ensues pushing the price either up or down. Even though Mt. Gox carried 90% of all volume back in 2013, this difference between exchanges happened back then as well. Gox price led the surge upward creating a discrepancy over pricing exchange to exchange – which throws everything into a great state of flux as no one is quite sure what it should be worth.
Well I’ve said it before and I’ll keep saying it, its a good time to buy Bitcoin. Its a powerful political move against banking dominance, its a more secure method of storing wealth. . . and it could make you rich.