Bitcoin is most oftenly referred to as an investment vehicle, as its price per BTC is bound to go up sooner rather than later, according to analysts. Considering the fact that Bitcoin’s coin supply is fairly limited – 21 million coins by 2140 – and there is a growing number of users and transactions, that statement may hold some merit. But at what price will we be in 2016?
Expected Bitcoin Price Point of US$400
The Bitcoin price is one of the hottest topics of speculation in the financial world these days. Ever since this digital currency went from a value of next to nothing to US$1160+ in 2013, more and more people have been closely eyeing the price charts. And even though the price per coin has fallen from its pedestal in quite a dramatic fashion, the core belief in this technology has never wavered one single bit.
It goes without saying that, in a market where supply and demand are the only two major factors in terms of trades taking place, determining a price point for next year is quite difficult. And even though most people would love nothing more than to see the Bitcoin price shoot up to four or five digits sooner rather than later, that is not realistic.
However, a price point of US$400 per BTC by 2016 may be more realistic. Or that is the expected Bitcoin price, according to a recent report by Wedbush Securities. It is important to note however that, should this Bitcoin price be reached, it will heavily depend on the trade value of the first publicly traded bitcoin fund, called GBTC (Bitcoin Investment Trust). GBTC is currently trading at a value of US$30.55, and would – according to the report- reach a value of US$40 by next year.
“By aggregating the utilization of the various applications, we arrive at our $400 BTC price target, which translates to $40 per share of GBTC. This implies [roughly] $6bn market capitalization, which we would also describe an option on bitcoin supplanting some payment volumes from Visa, MasterCard, PayPal and Western Union, who combine for [less than] $300bn in market cap.”
We are still a long way away from achieving that price point, but there are some positive signs to be noted. According to the Wedbush report, there is an increase in Bitcoin demand, which mostly stems from the increased usage in terms of remittance and e-commerce. In fact, if this trend keeps up, Bitcoin could power as much as 10% of the world’s online payments, and up to 25% of world remittance by 2025.
Solving the Hoarding Problem
Another major factor in the Bitcoin price change is whether or not the hoarding problem can be solved. Right now, most people who own Bitcoin have no real incentive to spend them for everyday purchases, as they will not receive a special discount. Additionally, quite a few people hold Bitcoin from an investment point of view, which only adds to the hoarding problem.
According to the Wedbush report, the amount of BTC held as an investment vehicle will decline by 2% annually for the next ten years. To put this into numbers, 25% of all Bitcoin in circulation is now being held as an investment and not being spent – this number will drop to 5% by 2025.
Regardless of how you want to interpret these statistics, it is important to keep in mind that there are no guarantees for a Bitcoin price increase in the near future. There will always be a chance of Bitcoin’s value dropping like a brick, rendering the digital currency completely useless.
Source: Wedbush Report
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