Bitcoin Prediction – Factors That Could Significantly Influence Its Price

What is the future of Bitcoin and other cryptocurrencies? In a situation of such a downturn on the crypto market, this seems to be a pressing question.

The future development of the cryptocurrency is discussed by many including the world’s leading entrepreneurs. John McAfee, the founder of the McAfee security software company, is one of them. In fact, he believes that by the end of 2020, one Bitcoin will be worth one million USD. He is so confident that he said he would eat his own penis should his prediction fail.

Bitcoin Price Prediction for 2018

Bitcoin price predictions for 2018 range from $40,000 to $100,000 for a digital coin. However, some forecasts are less enthusiastic. According to the data analyst Xoel Lopez Barat and his technical analysis, the price of Bitcoin at the end of 2018 is most likely to reach somewhere between $25,000 and $90,000.

The truth is that due to the unstable environment of the crypto market and the consequent Bitcoin value volatility, the reliability of all the predictions is more than questionable.

There are numerous factors that can influence Bitcoin price and push it up or down significantly and based on the “bear” vs. “bull” concept, there are different views on the importance of those factors.

Factors That Positively Influence Bitcoin

Lightning Network Transactions

The implementation of the Lightning Network enabling super-fast and super-cheap transactions is expected to influence the price of Bitcoin in 2018. The Lightning Network excludes unnecessary transactions from the blockchain making it less demanding and thus cutting the blockchain’s power consumption that is often greater than that of many countries. The Network also deals with high transaction fees that till now could be as high as a few dollars making the smaller transactions way too pricey. Therefore, the implementation of the Lightning Network should reduce the fees significantly.

Moreover, the step to implement the Lightning Network could appeal to fintech companies since connecting Bitcoin users and companies accepting Bitcoin payments might be a great opportunity to take the leading position on the payment gateway market.

Bitcoin Exchange-Traded Funds

At the beginning of 2018, the U.S. Securities and Exchange Commission got several requests for approval to launch Bitcoin exchange-traded funds. These Bitcoin exchange-traded funds might attract new investors and increase the capital flowing into the cryptocurrency market.

Bitcoin Futures

The steep growth of the price of Bitcoin at the end of 2017 was partly caused by the highly anticipated launch of Bitcoin futures (a contract where the buyer agrees to purchase an asset at a predetermined price at a given time in the future) at major US stock exchanges.

As a result, the important connection between Bitcoin and Wall Street was established which helped Bitcoin gain more credibility in the financial world. However, the connection is mainly symbolic since the “Wolves of Wall Street” stick with the dollar and do not really use Bitcoin.

As of 2018, NASDAQ and some other exchanges might step up and introduce Bitcoin futures. It is also expected that more cryptocurrencies, such as Ether or Litecoin, might be available for futures trading this year.

Factors That Could Make the Price of Bitcoin Fall

Bubble Burst

Sceptics often warn of the crypto bubble that could burst any time. There is a major trend of people purchasing Bitcoins only as a future investment and not as a currency for common financial operations. In other words, people keep buying more and more Bitcoins just to profit from selling them to the latecomers. However, latecomers might one day become non-comers due to crypto market panic or other reasons.

Governments’ Regulations

Some of the countries such as South Korea or China as well as members of European Central Bank and Theresa May expressed the need for further regulations concerning digital currencies.

Although stricter laws on cryptocurrencies do not mean to outlaw their use completely, such acts can still affect their price. The governments use the regulations to prevent money laundering and cryptocurrency-based funding of terrorism that the anonymity of digital currencies enables. Recently, the South Korean government has already taken the first steps by banning anonymous crypto trading.

Cyber-Attacks

Just as in any digital space, cyber-attacks are common. In the crypto world, hackers target mainly exchanges of digital currencies.

Back in 2014, the price of Bitcoin dropped from about $1000 to half and later even lower following the Bitcoin theft from the Mt. Gox exchange, the largest Bitcoin exchange at the time.

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