Bitcoin ended the 2016 year at nearly the $1,000 mark on December 31st, when the stocks closed. Ending high, the Bitcoin continued to do well into the new 2017 year. However, how high can Bitcoin go? With a strong Chinese demand for alternative currency and Trump’s spending binge making the world nervous, the Saxo Bank released a report that predicted the value of Bitcoin could triple in value to over $2,100.
While this seems like an outrageous prediction, there are many events occurring around the world that are increasing the demand for Bitcoin, a demand for alternatives to failing conventional currency, alternatives to central banking, and financial situations in different countries that are raising the value of the finite Bitcoin.
The Trump Factor
In Saxo Bank’s annual “Outrageous Predictions” report for 2017, they predicted that the expected increase in fiscal spending that the Trump administration will undoubtedly commit will cause inflation in the U.S. dollar and force the Federal Reserve to speed up their hikes. This will result in the U.S. dollar increasing significantly, making it an even more attractive currency than it already is for foreign investors.
How this Affects the Bitcoin
The inflation of the US Dollar will create a domino effect, especially in China, where a huge portion of the population have been seeking out alternative forms of currency due to their failing Yuan, which is tied to central banks in the country.
Bitcoin is often one of those alternatives to conventional currency, since more and more retailers (online and in-store) are accepting Bitcoin for purchases. In addition, once you have purchased Bitcoin, you can keep it as an investment as the value rises, or you can exchange it for the currency of your choice — if individuals exchange it to US Dollars or continue to use BTC as their preferred currency, they hope to avoid the financial ramifications occurring in China and India.
Why can’t they exchange Yuan directly to USD or another currency? China has strict capital controls which makes it hard for any Chinese citizen to convert the yuan currency into foreign currency. This limits the amount of cash that investors can move abroad and makes it difficult for the everyman to invest in themselves rather than being paid less as the value of the yuan decreases.
Bitcoin is the natural place to turn when seeking a cryptocurrency. It is anonymous, there is a finite amount of Bitcoin, it is the most accepted and legitimized cryptocurrency, and it is rising in value. Ending 2016 and entering 2017 quite strongly in price, the Bitcoin would benefit from the global financial and political chaos.
The Bitcoin’s value is expected to increase due to the impending Trump spending and inflation of the USD, but it also has shown to increase (and continues to do so) in part because of Chinese investors looking for higher returns.
China is a huge factor in the rise of the Bitcoin up until 2017 thus far. China accounts for a whopping 90 percent of all Bitcoin trading on exchanges. As we stated previously, China has strict controls over their currency and their citizens, and this makes it extremely hard for the Chinese to convert their yuan into any foreign currency.
However, going online and investing in Bitcoin is a way out for the Chinese. This is why 90 percent of Bitcoin trading on exchanges is from China — they are opting into this cryptocurrency out of sheer need for daily life as well as for its investment potential.
Many analysts agree with the prediction by Saxo Bank and states that the price of Bitcoin will indeed continue to rise as additional devaluations are expected by the Chinese government.
The US Dollar is appreciating slower than the yuan in comparison to Bitcoin, which makes the $2,000+/- BTC value not that unreasonable to expect.
While this prediction is more of a “fringe prediction” than a certain expectation, it is something to look at as Trump takes office and the Chinese government continues to devalue the yuan. It is not recommended that you purchase Bitcoin in boatloads with expectations of making a killing in the stock later on, but knowing that Bitcoin could significantly increase for investors, Bitcoin gamblers, and those who seek alternative methods of keeping their money safer from political and financial damage.