Bitcoin price took another roller coaster ride for a few hours when it increased to a high of $16,500 and in a matter of few hours dropped down to $14,400.
The short-term gain saw analysts speaking in favor of bitcoin again with John McAfee again claiming that he stands by his prediction that bitcoin will reach $1 million by the end of 2020. The price surge didn’t last long though and there was a decline of about 7 per cent soon after it reached $16,500 levels.
Those familiar with bitcoin won’t be too surprised with the price surge and decline considering that bitcoin has always demonstrated a tendency to recover from large corrections. Bitcoin’s speedy recovery after Christmas was expected by most investors in the cryptocurrency market, but the current decline soon after a recovery wasn’t expected.
McAfee’s $1 million bitcoin price prediction by 2020 is noteworthy because other investors such as Overstock CEO Patrick Byrne and Mike Novogratz have suggested a similar figure. Analysts believe that once the market valuation of bitcoin surpasses the trillion dollar mark, it will be able to surpass the market valuation of traditional assets like gold and eventually penetrate into the global offshore banking market.
Investors in the cryptocurrency market are anticipating a variety of factors and events to lead to a bitcoin price surge. The filing for 8 bitcoin exchange-traded funds (ETFs) by the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (Cboe) for instance is expected to bring many billions of dollars into the bitcoin market.
Given the success of the futures exchanges of Cboe and CME, experts state that the probability of the US Securities and Exchange Commission (SEC) approving the ETFs of the two institutions is very high.
Another major factor that could drive the price of bitcoin up significantly is scaling. Currently, it remains unclear whether the Bitcoin Core development team and the community will initiate a block size increase to eliminate congestion on the Bitcoin blockchain network.
The majority of bitcoin users are paying fees in the range of $3 to $5 per transaction. Such high fees disallow users from making payments below $30. Wallets like Blockchain and Coinbase, two of the largest platforms in the market, are recommending a fee of 120 bytes per transaction.
But, innovative scaling solutions in 2018 could enable users to process payments with fees under $1. Notably, solutions like Lightning with SegWit, possibility block size increase, and other second layer solutions could provide efficient scalability.