Investment Analyst: The price of Bitcoin will double again in 2017, reaching $2,000

The price of bitcoin is always a hot topic. The recent roller coaster trend of the price of bitcoin has excited bitcoin investors. Investment analysts at the financial information platform Lombardi Letter believe that this positive trend will continue throughout 2017.

Analyst: The price of the currency will double again

According to Lombardi Letter editor Benjamin Smith, the price of bitcoin will continue to rise in 2017, and there are many factors driving this trend. In fact, he believes that this year Bitcoin will repeat the same plot as last year: the price of the currency will double again.

I think the price of the currency can reach $2,000 this year unless the exchanges or trading methods face any strict regulatory rules.

There are so many positive factors that can drive the development of Bitcoin at present.

These positive factors are based on several "good development foundations." First, he mentioned China's lingering economic problems. In the past four years, the renminbi has depreciated by nearly 14% against the US dollar. There is no sign that the depreciation trend of the renminbi will stop. Since China is still the largest buyer's market in the field of Bitcoin, this economic situation is conducive to increasing the demand for Bitcoin.

The factors causing capital outflows and currency depreciation in China will only become more diverse. In fact, there are signs that the trend of RMB depreciation will continue.

China is no longer the only power

There is one major problem with his argument. All of his analysis is based on the premise that China controls “85% of Bitcoin trading volume,” which is not true. According to Coinhills, since Chinese regulators ended the “zero-fee era” for exchanges, the domestic market share of Bitcoin trading has shrunk to about 40% , but China is still the market leader.

The yen now accounts for one-third of the trading market, and the dollar's share has risen to 25%.

Smith noted that volatility in the bitcoin market has decreased. “Although the money supply is strictly controlled — 16 million bitcoins have been produced so far — the increase in transaction speed can bring greater liquidity and stabilize the price.”

The fate of several major Bitcoin ETFs will be revealed on March 11 this year. Bitcoin ETFs have a significant positive impact on the price of the currency; business plans around the Bitcoin blockchain will also help this digital currency go mainstream.

The deployment of Segregated Witness (SegWit) can effectively increase transaction processing speed and greatly increase transaction volume. Smith said that the activation of Segregated Witness will also have a positive impact on the price of the currency. However, judging from the current support rate of Segregated Witness, it is far from reaching the activation threshold, so it would not be surprising if this update could not be successfully added this year.

Other positive factors

I agree that this year will be a big one for Bitcoin, based on a number of factors. India’s demonetization and the rise in Bitcoin trading will certainly help the digital currency in 2017; demand for Bitcoin has also been increasing in Nigeria, Venezuela, and Japan in recent months; and the impending New York stock market crisis will see many investors turn to Bitcoin for safety. Similar situations will occur later this year.

Finally, I want to say that it is not a foolish dream for the price of the currency to reach $2,000 in 2017. Conservatively speaking, $1,500 is inevitable. If the predictions of Bitcoin ETF and the collapse of the New York Stock Exchange come true, pricing this "digital gold" at $2,000 is still too low.