1. Price of bitcoin has been more stable than many asse out therets
In the last 1,5 years bitcoin has shown unprecedented stability as a financial instrument. It has been more stable than ever before which has increased trust in the currency. Historically large price increases have always been preceded by a stable period and now we’ve experienced the most stable period so far.
The volatility of bitcoin price has been decreasing
During this stable period there have been times when bitcoin has been more stable than the US stock index, japanese yen or even gold. This is totally unprecedented for something like bitcoin and it is a strong indicator. It means that bitcoin is growing up as a currency and is ready for the next stage of growth.
2. Global economy is mess
The economic situation is unstable all over the world but the value of bitcoin is not strongly correlated neither with the stock market nor national currencies. Bitcoin may in fact benefit from the collapse of the traditional economy which means that it is smart to diversify some funds into bitcoin.In 2008 the economy collapsed due to unsustainable debt structures but what many people don’t understand is that debt has only increased since. It is possible that in this decade we will see an even larger collapse.
The world is acquiring more and more debt
In that type of situation traditional safe havens such as physical gold will likely rise in value but this time bitcoin will have a significant role. Bitcoin as a currency is similar to gold, it is scarce and can’t be created from nothing . However the features of Bitcoin are more advanced as it can be moved effortlessly to anywhere in the world.Weak national currencies are already a great source of demand for bitcoin. The growth of bitcoin trading volume is high in countries such as China, Latin America, South Africa and based on recent reports, also in India. Due to the weak valuation of local currencies people want to exchange increasing amounts of traditional currency into bitcoin.The worse the traditional economy gets, the better it is for bitcoin. This is why it makes sense for anyone to diversify a portion of their investment portfolio or savings budget into bitcoin.
3. The creation rate of new bitcoins is deflationary
In July the daily amount of new bitcoins created will halve from 3 600 bitcoins to 1 800 bitcoins. This is a fixed rule set in the Bitcoin protocol since the beginning and it activates approximately every 4 years. The next halving isestimated to happen on July 10th and in addition to the actual reduction in new bitcoins created, it is expected to have significant speculative meaning.
As you can see from the picture, most bitcoins have already been created
As a currency bitcoin is very different to national currencies such as the dollar or the euro. Bitcoins can’t be created out of nothing and the amount of bitcoins is predetermined and strictly regulated by the protocol itself. The maximum amount of bitcoins is 21 million and there will simply be no more. To this date 15,5 million bitcoins have been created.This absolute scarcity of bitcoins is one of the biggest reasons why they are such a good investment. As the user count of Bitcoin increases, we can assume that the price of bitcoin also increases. This causes no problems for the use of Bitcoin since a single bitcoin is divisible to very small pieces. Euros or dollars are divisible to one hundredths (cents) while the smallest bitcoin unit is 0.00000001 bitcoins, which is also called a satoshi.The halving is one of the most significant Bitcoin events of 2016 and it is accompanied by a lot of price speculation. Now is a good time to stay updated on the events of the Bitcoin world.
4. The price graph looks very tempting
The current price graph of bitcoin resembles the situation preceding the great price increase of 2013 a great deal. Bitcoin had recovered from the first price bubble of 2011 and stabilized. Then we saw the largest price increase to date when bitcoin increased from 13.5 dollars in the beginning of 2013 to an impressive high of over 1 100 dollars in December 2013.
Price of bitcoin from February 2012 to February 2013
Price of bitcoin for the last 12 months
The price development of bitcoin has repeated a similar pattern many times. That does not prove the same pattern will repeat in the future but it does increase the likelihood of it happening again. The price graph now is very similar to what it has been right before the large price increases in the past. That is quite interesting.
5. Ordinary cash is not safe anymore
At least in some parts of Europe there seems to be an increasing movement to get rid of cash. The trend is increasing in many developed countries where digital payment methods have high adoption. However, from a privacy perspective cash is an important payment method and traditional digital payments methods leave a lot to be desired in that sense. Bitcoin is digital cash and any attempts to remove actual cash will increase the demand of bitcoin.
Plans to abolish the 500 € bill is only the beginning
The digital revolution of money brings significant enhancements in ease of use but it causes problems for privacy. We are in danger of moving into a police state where everything people do can be monitored. In the era of digital money and payments Bitcoin is an alternative that retains the features of cash.It is almost certain that all attempts to remove cash will increase the demand of cryptocurrencies and right now Bitcoin is the king of cryptocurrencies.