The Bitcoin price movements have been incredibly sluggish in recent months. For an asset as volatile as cryptocurrency, this is surprising. As per current statistics, the BTC/USD price is hovering around the $5,300 mark, which is a substantial drop from Bitcoin’s winter highs. Many experts, including Mike McGlone of Bloomberg, believe that this is a sign that the popular cryptocurrency has passed its infant stage and is now a more mature asset class. This would explain the lack of volatility Bitcoin has experienced recently. But is this true? Or will Bitcoin revert back to its volatile nature? Here is a look at where Bitcoin is heading and what we can expect in the near future.
Scenario 1: To the moon
Many are hoping that Bitcoin’s recent price trends are not a sign that Bitcoin has stabilized or that Bitcoin has established itself as a store of value. Those who view Bitcoin as a speculative investment would much prefer it if the price stabilized at a higher point since the $6,000 range is nowhere near the price at Bitcoin’s peak, which topped $20,000. They are hoping that this is the case of ‘Sleeping Beauty’ and that soon Bitcoin will wake up and resume its volatility. This is not the first time that Bitcoin has stagnated. In past, Bitcoin broke out of its stagnation and the price surged. This includes the now famous rally that occurred back in December 2017. Thus, it is not outside the realm of possibility that this could happen again.
Right now, both the transaction volume and the number of daily transactions have declined quite a bit since December 2017. While this seems alarming, many experts still expect Bitcoin’s price to surge again by the end of the year. Some think the price might go up to $20,000 by the start of 2019, while others even think the price could jump past the $40,000 mark. At the very least, this shows that people have a lot of faith in Bitcoin. Although Bitcoin has been more stable in recent months, it still has a rich history of major fluctuations. This makes it harder to predict price trends.
Scenario 2: A more regulated currency
Legislation and regulation both remain a major problem when it comes to Bitcoin. Governmental reactions are all over the place. Some have embraced it, others have banned it outright. Overall, most do not have a solid regulatory framework. The governmental bodies have based their regulations on the laws they had in place for other assets. They are not designed with Bitcoin specifically in mind. This is problematic because cryptocurrencies are a unique beast. With so much inconsistency and uncertainty, a lot of people have chosen to stay out of the cryptocurrency arena until the situation becomes more clear-cut.
Scenario 3: Large-scale adoption
Despite the continuing problems associated with regulation, there are still several signs that Bitcoin is about to bounce back in a big way. For one, InterContinental Exchange is developing a new platform called Bakkt, whose goal is to improve the utility and reliability of Bitcoin. With Bakkt, there will likely be physically backed Bitcoin futures entering the market. This will make Bitcoin more legitimized and competitive with stocks and bonds.
Another positive sign is that older generations are starting to show interest in Bitcoin. While it is more associated with millennials, non-millennials are also eager to learn more about Bitcoin. That said, it is also gaining even more strength among younger generations. Blockchain and cryptocurrency related courses are showing up at universities around the world. Better yet, these courses have proven popular. This suggests that Bitcoin is more than just a fad.
Meanwhile, financial advisors and institutions are starting to gain more interest in Bitcoin as their clients are asking about it. From Fidelity to the Commodity Futures Trading Commission, Bitcoin has garnered a lot of attention. This suggests that despite what the price charts might seem to indicate, the demand for Bitcoin is higher than it may seem.
So, where is it heading?
Bitcoin is evolving. It is becoming more mature and less volatile. In all likelihood, Bitcoin will eventually become stable, and we will stop seeing the dramatic fluctuations we have come to expect. It is possible we have already reached this point, but only time will be able to tell if this is true. Even if the price of Bitcoin does end up exploding again, eventually it will plateau as most assets do. There is still a good possibility that the value of Bitcoin will climb back up sooner rather than later, mainly because there are still a lot of institutional investors who have not entered the Bitcoin game.
As Bitcoin continues to evolve, the infrastructure around it will improve. If Bitcoin becomes easier to use as a form of payment, investment opportunities will diversify, and more and more vendors will start to accommodate Bitcoin. As a result, the cryptocurrency may very well see its value spike, at least for a little while.
Regulations are another issue entirely. It is a sort of the Wild West right now. With no clear or unified regulatory framework, the situation is chaotic, lawless, and unpredictable. Many people have chosen to avoid the messiness and stick with what they know. However, if this changes and the regulatory framework becomes stronger and more tailored to Bitcoin, an entirely new group of investors could end up entering the Bitcoin market. If this happens, it could be a real game changer.