HONG KONG, Jan. 2 (UPI) — The trading value of bitcoin has breached the $1,000 trading level for the first time in its three-year history. The early 2017 feat has the currency already building on its 2016 gains.
The digital coin increased more than 125 percent in value in 2016. Some traders expect the coin’s accelerated growth to continue in 2017.
Much of bitcoin’s recent trading success is owed to growing interest in China and India, where capital controls are putting a squeeze on cash. Fears over trade wars, currency manipulation and economic tension in the wake of Brexit and the election of Donald Trump also saw the currency’s value spike.
India Prime Minister Narendra Modi recently announced a ban on high demonization rupees, fueling interest in online currencies like bitcoin.
In China, citizens can exchange up to $50,000 yuan with the bank each year. Growing interest in such exchanges, given the ongoing devaluation of the Chinese currency, may inspire the Chinese government to execute stricter capital controls to keep money from flowing out of the Chinese economy.
Bitcoin’s already enjoys its highest trading volumes in China, and it may become even more popular if things play out as Chinese investors and market experts expect.
“We are seeing the aftermath of zero interest rates run amok,” Bobby Lee, CEO of BTC China, a major global bitcoin exchange, told CNBC. “So bitcoin is a healthy reminder that we don’t have to hold on to dollars or renminbi, which is subject to capital controls and loss of purchasing power. Rather it’s a new asset class.”
The simple fact that bitcoin is harder to “mine” — thanks to a process called “halving” — and is being used by more people, makes it more valuable.
“The value of Uber in any city is directly dependent on the number of drivers and number of users, it’s not linear, it’s exponential. The same is true of the value of bitcoin,” Lee said.
Bitcoin is an anonymous currency that is exclusively digital and unrecognized by any government. There are only a finite amount of Bitcoins, 21 million, so the currency can’t be manipulated.
“Bitcoin payments are impossible to block, and bitcoin wallets can’t be frozen,” according to the coin’s website. “Short of turning off the entire world’s internet, and keeping it turned off, the bitcoin network is unstoppable and uncensorable.”