Bitcoin prices are skyrocketing. Is this due to increasing popularity or are exchanges driving up prices?

Many cryptocurrency and blockchain experts are surprised by the rapid rise in the price of Bitcoin. We all know that Bitcoin is a promising investment tool, but in just six months, the price of the coin has doubled, from $850 in December last year to a peak of $1,750 in May. Did news such as government acceptance of cryptocurrencies play a key role in the price war between Bitcoin and other altcoins? Or are we just seeing another scam? Will there be a price correction soon?

Bitcoin Acceptance in Japan

One of the main drivers of the recent surge in Bitcoin prices is Japan. The Japanese government has officially recognized Bitcoin as a legal payment method since April 2017. Currently, tens of thousands of stores have begun to accept Bitcoin to sell their goods and services.

The following figure shows the price trend of the currency from April 1 to yesterday:

Rob Gonzalez, an engineer at LocalBitcoins.com, said:

Japan is the real factor causing the current price increase. More than half of the transactions come from Japan.

John MacPherson, compliance manager at peer-to-peer exchange Wall of Coins, believes that the current rise in Bitcoin prices is too great:

I think we will see a price correction soon. I am pretty sure Japan played a big role in pushing the price higher.

Exchanges manipulate coin prices?

However, not everyone in the crypto community believes that the news from Japan is enough to cause the price of the currency to rise for such a long time.

Gonzalez said:

I think the price is abnormal. I think there are exchanges manipulating the price, such as Bitfinex and Mt Gox. Once the debt is paid off, the price will fall. Even if there is good news, the price of $1,700, $1,600 or even $1,500 is too high and too fast.

Kumar Gaurav, founder of blockchain company Cashaa, also had his own insights:

I understand that Mt Gox is indeed one of the reasons, and it purely achieved the purpose of limiting resources, and other factors become insignificant. (The current price of the currency) is either manipulated by someone or it is a scam to sell at a high price.

Recently, not only Bitcoin, but also the price of altcoins has risen sharply. MacPherson said:

It is likely that because Bitfinex has suspended Bitcoin withdrawals, users have started to move their funds into altcoins. This is what caused most altcoin prices to rise. After all, normally, if Bitcoin prices rise, altcoin prices will fall, unless an equal or greater amount of money flows into altcoins. This usually happens whenever an exchange stops withdrawals.

The suspension of fiat currency deposits by cryptocurrency exchanges in April due to banking issues did not have much impact on the price of cryptocurrencies.

However, Bitfinex recently announced that the company would hire a professional auditor to investigate its financial situation to prove that they were not affected by the suspension of withdrawals or debt repayments.

If the price of the currency continues to rise

Gonzalez also mentioned other rule changes, such as the U.S. Securities and Exchange Commission (SEC) policy, which will have a significant impact on the price of cryptocurrencies.

There may be a price correction soon, but if the SEC changes the rules on the 15th of this month, the price of the currency will definitely rise sharply. In any case... the price of the currency is likely to reach $3,000 this year.

Countries such as Russia that plan to change their views on Bitcoin and blockchain or the abolition of double taxation on Bitcoin in Australia may lead to a new round of price increases.

Consultant Adam Davies once predicted that the price of Bitcoin will reach $3,000 before the end of this year. He said:

I think we could hit $3,000 this year because as Bitcoin becomes more used and accepted, I think its popularity will increase.