Bitcoin started 2017 by continuing its amazing run-up in price that started in the last quarter of 2016. Having ended this year just shy of $1,000 per bitcoin, 2017 saw that number crushed on its way up past $1,100.
However, within the first week of the new year, bitcoin changed direction and rapidly lost value based on concerns of additional regulations in China. This caused the price of bitcoin drop to about $750 only to bounce up and stabilize closer to $750 to $800 per bitcoin. It was an exciting first two weeks of the new year for sure.
Note that nearly 90% of all bitcoin trading currently happens in China, so any development on the Chinese mainland tend to affect bitcoin prices worldwide. The latest concerns have caused a level of uncertainty contributing to price volatility. Although we have seen this kind of reaction before with bitcoin, 90% trading activity is still plenty to sway a market, even for a little while.
China’s Central Bank Speaks
The People’s Bank of China (PBoC) met with representatives of 3 major Chinese online bitcoin exchanges. On January 6th, they announced that they had warned Chinese citizens that bitcoin is new and speculative, and that investing in bitcoin was not protected under Chinese law.
On its surface, this sounds like prudent advice. I share the same sentiments with my bitcoin students as well. However, some traders and analysts signaled a growing sense of anxiety about China’s desire to more closely monitor and possibly regulate bitcoin.
Price Volatility Calming
For now, it seems that bitcoin price volatility is calming at around $800 to $825 per bitcoin. Whether it’s China or another uncertain condition, bitcoin remains speculative and volatile. Yet with each passing year, bitcoin become more stable and more resilient to such events. In this case, it seems that traders have realized their overreaction and that prices again are rising.
I expect that 2017 will continue to bring more gains to bitcoin, albeit with plenty of volatility to keep active traders engaged and “buy and hold” investors a little bit anxious. Remember that the value of bitcoin continues to grow for many reasons, including its independence from failing central bank policies and global bank corruption.
Gold, Silver and Bitcoin
Gold, silver and bitcoin are likely to gain greater interest among investors in 2017 and beyond as the signs of global economic pressures and ongoing political failures around the world reach a tipping point. Then, the sky’s the limit for all three of these commodities.
What I know for sure is that this is an exciting time for bitcoin and digital currencies and it’s a time with plenty of uncertainties. It will be worth watching to see how bitcoin impacts the world of finance as we know it, and impacts it may have to the politics of money as well.