Bitcoin price has been rising fast over the last month, after remaining relatively stable since the turn of the year. Currently more than three times the value it was just one year ago, and with a 30% rise in 30 days, Bitcoin has suddenly become a magnet for investment funds, but there are some questions. Firstly, why is it happening, and secondly, is it sustainable? We need to look outside the digital currency industry to find the answers and understand how digital currencies are benefitting from the turmoil that is enveloping the developed world.
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It probably has not escaped anyone’s attention that Bitcoin’s value against the U.S. Dollar has risen dramatically over the last month. After hovering around $400 per Bitcoin since the start of the year, the last month has seen a rapid rise to $750 per Bitcoin, a remarkable change that has many rejoicing. However, the important thing is to understand why it has risen this way, and essentially, is this a new stable value, or just a temporary thing?
The first question is why, and here the answer lies not necessarily in the digital currency industry itself, but rather in the world around us. Uncertainty, both political and financial, dominate the news, whether it is the U.S. presidential elections that could throw the political landscape into the unknown, or the UK referendum on EU membership that has the possibility of sending the financial world into confusion and a downward trajectory, or maybe it is the never faraway clouds of recession that are hanging over nearly all major economies, the future is not as clear, or happy, as it once was. In this environment, people are looking for an alternative, something that could be relatively immune to the kinds of financial catastrophes that are concerning us all. Gold was once the bastion of funds when the stock markets wobble, but today, with gold itself becoming a leveraged market for small investors and thus owning gold itself, rather than a theoretical paper ownership, is a bigger challenge than ever.
It should really come as no surprise that this situation has seen a rise in Bitcoin value, when the EU imposed financial restrictions on the people of Greece during its bail out, allowing them just 65 Euros per day withdrawal (from their own bank accounts remember!), Bitcoin use boomed. It avoided such restrictions of course, and here is why we are seeing such value attributed to it now. The concern that the global financial markets are heading back down the path they took in 2008 is growing, and standing outside that same system, Bitcoin and cryptocurrencies in general, are increasingly being seen as a safe alternative to avoid potential issues.
Will it continue? The only thing we can be sure of is that if uncertainty continues, more people will look for alternatives, and Bitcoin is perhaps the one to benefit most from that situation.