Since its inception Bitcoin has come under scrutiny for a number of aspects including volatility, fraud and utility. However, none of these have been as consistent as the alleged bubble burst that is “imminent at any moment” since interest in Bitcoin spiked. With the recent dip in Bitcoin (crypto in general), many people are speculating that this is the bubble burst that skeptics have been harping on about for so long. But is this the case? Should we be worried that the Bitcoin price has dipped? Has the bubble truly burst on crypto?
Bitcoin has gained popularity in certain countries despite its recent dip. This is likely due to factors such as an unstable economy and uncertain economic future. This has seen many residents of these countries move towards Bitcoin as a currency.
Interest in crypto spiked in 2017 due to increasing value. For crypto investors, the recent dip has shaken their trust in Bitcoin. Should investment in Bitcoin, or crypto, be of concern? What has led to the dip in price in the first place? And how will we know when and if Bitcoin’s price will go up?
In 2014 the IRS announced that Bitcoin is perceived as property and not currency. This caused people holding Bitcoin to be labeled as investors, and in addition, complicated the process in which these “investors” had to go through in order to declare their bitcoin earnings. This caused a lot of Bitcoin holders to sell their Bitcoin in order to pay their tax. The decline in Bitcoins worth, according to sources like Forbes and Smartereum, is due to these tax payments along with the recent Bitcoin cash hard fork.
Although it is hard to predict how Bitcoin will fluctuate in the future, it is safe to assume that like with any currency if it is utilized, then it’s worth can be assessed according to what Bitcoin is used for. However, Bitcoin gets its value in the way of basic economics; scarcity, utility, supply and demand. Much like gold, Bitcoin is expensive because it is rare. Bitcoin’s price is determined by the amount buyers are willing to pay for the future value of Bitcoin. Meaning, if the market believes the value of Bitcoin is at a certain price, or should be higher in the future, they are more likely to pay more now. The utility of Bitcoin and its ever-evolving nature, adds to the speculation towards its future value and allows buyers to set a price to which they believe they should pay for Bitcoin.
In conclusion much like a roller-coaster Bitcoin has its ups and downs, is unpredictable and at times will make you want to throw up. But that’s not to say that the ride can’t be fun. Although the future price of Bitcoin is a mystery there is no doubt that Bitcoin will stay around for a while due to its value it provides through its utility. Privacy, security, and low transaction fees will always be features that set Bitcoin apart from standard fiat transactions. Therefore, Bitcoin will always have value for Bitcoin users.