Bitcoin has wrapped up 2016 with a remarkable price surge, reaching a three-year high of $900 (£730) per coin. The cryptocurrency, which started the year at just $435 per coin, has nearly doubled in value, despite facing multiple setbacks, including cyberattacks on major exchanges.
The Driving Forces Behind Bitcoin’s Rise
Experts attribute Bitcoin’s steady climb to multiple global economic factors, particularly the depreciation of the Chinese Yuan and India’s aggressive push to regulate paper currency.
The Chinese Yuan has lost about 7% of its value in 2016, prompting many investors to turn to Bitcoin as an alternative store of value. Since a significant portion of Bitcoin trading takes place in China, the cryptocurrency is being used as a way to bypass strict financial regulations, allowing traders to move money more freely.
Meanwhile, in India, the government’s demonetization drive and crackdown on unaccounted cash, commonly referred to as “black money,” have also increased interest in Bitcoin. According to Charles Hayter, founder of the cryptocurrency analytics site CryptoCompare, economic uncertainty is making Bitcoin an attractive “flight to safety” for investors.
Cyberattacks and Security Risks
Despite its strong performance, Bitcoin has not been immune to security challenges. In August 2016, Hong Kong-based exchange Bitfinex suffered a massive hack, leading to the theft of $65 million worth of Bitcoin. The news triggered an immediate 10% drop in Bitcoin’s price, highlighting the risks associated with digital currencies.
Nevertheless, the cryptocurrency has shown resilience, rebounding from the setback and maintaining its upward trajectory.
Bitcoin’s Future: Will It Reach New Highs?
While Bitcoin has yet to reclaim its all-time high of over $1,000 per coin from 2013, its market capitalization has surpassed $14 billion, demonstrating sustained investor confidence. With ongoing economic instability and increasing institutional interest, the cryptocurrency could be poised for further growth in the coming years.
As governments tighten financial regulations and investors seek decentralized alternatives, Bitcoin’s role as a global digital asset continues to strengthen, setting the stage for an intriguing 2017.