While some industry projections peg that 2016 will be a better year for bitcoin, the digital currency sure stuck to its volatile reputation last week when it took a hard hit just after Christmas.
Following the holiday, bitcoin’s price took a dive of roughly 10 percent, according to price trackers, which showed that it dipped as low as $411.16 on Dec. 26. That’s a far dip from its December peak of $466.63 on Dec. 12. For the most part, bitcoin had been rising throughout December, giving hope that January would start out strong.
While yesterday’s price was only $421 in the early evening, the trends show that bitcoin could be on the mend after its most recent price slump. Some bitcoin industry data, such as tracking provided by bitcoinity, daily transactions dropped recently as much as 14 percent.
But dipping during the holidays isn’t anything new for bitcoin, as it followed the same trends in 2013 and 2014. This has typically been attributed to a dip in transaction volume and less bitcoins being traded.
Per usual for bitcoin, in just a few days following Christmas, it was able to spike back to more normal levels for the more recent price trends. Transaction volumes are on the rise, according to reports, and bitcoin exchanges have reported their trading volumes are going back up.
Perhaps that aligns with the predictions for 2016.
The year 2015 was a turbulent one for bitcoin, with prices fluctuating between its 2015 low of $177.28 (Jan. 14) to its peak of $465.50 (Dec. 15). But bitcoin’s boost toward the tail end of 2015 could mean a better 2016 for the digital currency that’s been garnering so much attention lately. With the rumors swirling that bitcoin’s creator has been discovered, that’s kept prices high, and some in the industry peg that bitcoin will have a strong start in 2016.
But what else is attributing to this projection? A recent Reuters piece dug into the slow growth in the money supply as being one that could give bitcoin’s price a boost. Citing the supply-and-demand theory, there’s some who’ve speculated that this could push bitcoin’s price up.
For example, Daniel Masters, cofounder of Jersey-based Global Advisors’ bitcoin hedge fund, believes that bitcoin could jump back around the 2013 all-time high of $1,100. His projections also have bitcoin surging all the way up to $4,400 eventually, according to Reuters.
But that may be far-fetched as many across the financial ecosystem have already called for bitcoin’s demise.
Still, what he attributes to the rise of bitcoin is the rising acceptance of digital payments and companies that have embraced bitcoin as a legitimate payment method. There’s also been an immense amount of attention given to the blockchain — the technology that powers bitcoin transactions.
Masters also suggests that the production rate in the bitcoin mining industry could also give bitcoin’s price a 50 percent boost from today’s price. Because bitcoin is still in its early stages, he believes its true potential has not been realized.