The price of Bitcoin has risen by 7200% in the last 5 years at a rate that rivals that of Spaceballs .
In 2021 alone it has nearly doubled despite China banning its trading. At the time of writing the price of a Bitcoin is hovering around 56000 USD per each.
And while some say that’s where the price will stabilize, Cathie Wood, of ARK Invest, says it could reach 560,000USD by 2026. Too optimistic! – you might say.
But why can the price jump so much in a few years?
The previous soar was mainly due to young investors, but the global virus situation in early 2020 saw companies jump in and buy huge amounts of Bitcoin. This of course gave the public confidence and they started buying Bitcoins.
According to Wood, if companies put just 5% of their portfolio into Bitcoin, the price could easily be 560,000 USD within 5 years.
Alongside gold and other precious metals, Bitcoin could easily be a safe haven for investors.
For example, countries that are suffering the adverse effects of inflation could follow the example of El Salvador, which has started to accept Bitcoin as legal tender.
Once Bitcoin is accepted as legal tender in several countries, it will be necessary for large banks, credit card providers and digital payment platforms to accept it along with other crypto and fiat currencies.
This will organically encourage more businesses and individuals to buy crypto. As digital life becomes increasingly digital, the boundary between the real world and the digital world will become thinner, accelerating the process described above.
The collapse of some speculative cryptos could drive further investors seeking stability to the Bitcoin mill, further strengthening Bitcoin’s position as the world’s number one crypto.
What could cause it to never reach the 560’000 USD price?
The environmental pollution associated with mining makes the crypto world look very bad, not to mention the rampant use of electricity.
For example, if Bitcoin reached a price of 500’000 USD, miners would produce 40% more CO2 than Brazil and 70% more than the UK.
All of this is of course compounded by the fact that Proof of Work is labelled as an environmental pollutant, but in practice, in many places, solar panels are used to run the “farms” or the heat generated is used to heat the facility.
Governments are certainly trying hard to regulate all cryptos, especially as they are supposed to make it easier to cheat on taxes, launder money and conduct anonymous transactions.
China, Bolivia, Colombia and Algeria are a few countries where crypto transactions have already been banned (at the time of writing). India, Russia and the US are also considering ways to regulate transactions.
And the black soup is that the price volatility itself could easily prevent it from becoming widespread in everyday use, because if we expect it to rise significantly in the next 2-3-5 years, we’ll hold on to it rather than order a quick bowl of it from the corner kebab seller.
On the other hand, if it stabilizes, it is easier for anyone to spend it on anything, since in the long run any fluctuations are irrelevant. However, this makes it impossible for its value to soar to around 560’000 USD.
Countries could launch their own digital currencies linked to existing national currencies to compete with Bitcoin. Of course, these would be much more “stable”, easy to track and environmentally friendly than Bitcoin.
Do you think Bitcoin will ever reach a price of over half a million dollars?
Let’s discuss in the comments!