Bitcoin Price Spike: Several Factors Contribute
Bitcoin watchers were surprised this weekend as Bitcoin prices suddenly spiked. The cryptocurrency was maintaining its value at around $574 last Saturday, when in just a few short hours, the price once again broke the $600 mark. It peaked at $615 and slowly declined to $604. The sudden Bitcoin price spike came after several months of the cryptocurrency maintaining a stable price level. Several reasons have been put forth for the change in Bitcoin’s condition.
One of the biggest factors that experts point to for the sudden surge in Bitcoin prices is the rumors of a coming recession. As a sign of this, negative interest rate policies have recently started to become adopted by countries like Japan and Switzerland. This means that savings in banks will not gain interest as normal, but actually will lose money if left idle.
This negative interest rate policy is supposed to incentivize investment and discourage leaving money idle, making it an unorthodox measure to fight recession. People wishing to avoid the negative interest rate trap have turned to Bitcoin as a means of keeping their capital safe, even with its volatile price.
The Chinese market, which has always been Bitcoin’s biggest supporter, is especially wary of upcoming changes in the financial environment. Chinese Bitcoin buyers have been buying Bitcoin as a hedge against changes in the yuan’s value for some time now. With an approaching recession, this may have pushed people into buying more. The same fluctuations were also experienced when the Brexit elections happened.
Another factor that could have contributed to Bitcoin’s sudden price spike is increased confidence in the cryptocurrency. First, there was the announcement that Bitfinex had seen the redemption of 1.1812 percent of Bitfinex tokens. Bitfinex’s recent hacking hit the Bitcoin world hard and it managed to drop Bitcoin prices several rungs. The fact that the victims are being compensated is a good sign for many people that Bitcoin can be trusted.
Bitcoin’s adoption by the Brave browser is another feather in its cap. The browser uses Bitcoin micropayments to help avoid the various ads that pop up. Considering that advertisements are the prominent source of revenue for many sites, these transactions are intended to subsidize quality content those using the browser. Brave’s developers think that this will be the wave of the future and are hoping that Bitcoin’s easy use and already large user base helps in the browser’s adoption.
Finally, there is the fact that Russia, one of the world’s biggest anti-Bitcoin countries, seems to be softening it stance. The Russian government recently relented on its hardline position, stating that it won’t be penalizing anyone using Bitcoin. This is the opposite of last year’s statement, where the Russian government threatened jail time and fines for those using Bitcoin.
With Bitcoin price volatility, it will be interesting to see whether the cryptocurrency maintains its current level of value.