Observers think that Bitcoin is set to post amazing results in the coming year after the now popular cryptocurrency went against all the odds to post an impressive trading performance in 2016. Earlier in the year, Bitcoin started trading at an all-time $358.
This low trading level created a buzz throughout the cryptocurrency community that Bitcoin was on its deathbed. However, as it happened, the cryptocurrency managed to bounce back a few months later to trade at over the $500 mark. And to complete what many describe as a meteoric rise, the currency rose to trade at $823, which is record-breaking for the currency since back in 2014 when it hit the $800 mark for a few months.
But what is causing a lot of talk among users, observers and the general public is how several factors influenced the rise of the cryptocurrency. Observers are of the opinion that the Brexit vote that was held towards the end of the year played a leading role in helping the cryptocurrency bounce back. Figures indicate that before the vote; the cryptocurrency was rising at a high rate.
Uncertainty about the outcome of the looming Brexit vote must have fuelled the rise of the currency months and even weeks to the vote. It appears that many people were concerned with the possible outcome of the vote (which turned out to be in favour of the UK exiting the EU) that they decided to hedge using the cryptocurrency.
Separately, the activities of governments in two leading Asian countries, Pakistan and India, must have contributed to the comeback of Bitcoin over the last few months of this year. Earlier, the Pakistani government announced that it was going to ban 5,000-rupee note.
The decision of the government was based on the need to step up the fight against black money in the country. Similarly, the Indian government took the bold move to remove the 1,000 and 500-rupee notes from the circulation in the country. These actions by the governments of the two countries must have created a huge demand for Bitcoins in the two countries, a factor that fuelled the comeback of Bitcoin over the last months of the year.
It is worth noting that these factors have exposed the nature of performance of the cryptocurrency. On the one hand, it has been pointed out that many people consider using the cryptocurrency as a form of insurance against possible unpleasant occurrences in the future.
It was based on the fear that the UK would vote to leave the EU that many people decided to exchange their cash into Bitcoins. Similarly, as the governments in India and Pakistan stepped up their efforts against illegal money, people chose to hedge against uncertainty by buying more Bitcoins.
However, according to experts, for Bitcoin to continue performing well in the coming year, the cryptocurrency has to appeal to many new users. It is widely known that the cryptocurrency has to compete with precious metals such as Gold as a form of insurance against financial volatility.
Also, many people are of the opinion that the cryptocurrency has a long way to go regarding competing with conventional methods of buying and selling goods and services. It is worth noting that few merchants are willing to accept payments in the form of Bitcoin. Therefore, these factors are likely to shape the performance of the cryptocurrency over the coming few months of the New Year.