Bitcoin price in 2016: falling or rising?

In July 2016, according to a set of established algorithms, the new production of digital currency Bitcoin will be halved again. How will this halving affect the price of Bitcoin? Industry insiders have different views on this.

According to an in-depth report by Reuters, the price of Bitcoin will continue to rise in 2016 and break the historical high of $1,100 set in 2013, reaching $4,400 by the end of 2017. The main reason for this is the slowdown in the growth of Bitcoin supply, which is consistent with the factors that cause price fluctuations in traditional fiat currencies.

Jeremy Millar, partner at Magister Advisors, a British technology industry consulting firm, also stressed that the law of supply and demand will play a vital role in price appreciation. "No one will question this basic economic principle."

As an Internet-based encrypted digital currency, Bitcoin can quickly and anonymously transfer funds without being regulated by the central bank. In the Bitcoin world, a data block is recorded on the public ledger approximately every ten minutes. This data block contains the transactions verified globally within these ten minutes. The first person who successfully verifies the transaction is allowed to add an amount to his account, the current amount is 25 Bitcoins.

To prevent inflation, the Bitcoin reward is cut in half every four years. Currently, 25 Bitcoins are generated every 10 minutes, but in July 2016, the reward will be halved.

Global Advisors claims to be the world's first regulated Bitcoin hedge fund. Its co-founder Daniel Masters has 30 years of experience in oil trading. Masters predicts that the price of Bitcoin will break the historical high of $1,100 set in 2013 in 2016 and reach $4,400 by the end of 2017.

The bearish factors are mainly from the uncertainty of the regulatory and policy aspects. Due to the anonymous mechanism of Bitcoin, some underground dark web transactions or Ponzi schemes from Russia have brought troubles to sovereign countries. At this time, the advantages of Bitcoin's application have become disadvantages, which is the biggest disadvantage facing the price of Bitcoin in 2016.

However, the industry still believes that the price of Bitcoin will rise in 2016. Analysts from Bitcoin startup OKCoin said that there are many factors that will drive the price of Bitcoin to continue to rise in 2016. In addition to more and more large companies, banks and regulatory authorities supporting Bitcoin payments, the underlying technology of Bitcoin, "blockchain", has attracted more and more interest and investment, and there is more demand from the Chinese market.

Of course, the main reason is that Bitcoin rewards are halved every four years. In the past three months, the price of Bitcoin has nearly doubled, which is the fastest quarterly price growth in the past two years. Masters predicts that this factor alone may drive the price of Bitcoin up by 50%.