Bitcoin (BTC) and the cryptocurrency industry as a whole has experienced a major surge over the past twelve months. Bitcoin exceeded the $5k mark in 2017 and looks set to exceed $16k next. At the time of writing, $16051 is the price that bitcoin is trading at. Altogether, it has risen by 546 percent since the beginning of 2017.
There are several other cryptocurrencies, such as litecoin and ethereum, which have followed the trend of bitcoin and experienced increases from 1325 percent to 4000 percent respectively. Aside from the underlying nature of cryptocurrencies (only a restricted quantity of them exist on the market), additional variables play a part in their rising value.
The following two variables are affecting the price of BTC at the moment:
The Involvement of Financial Institutions
Recently, the Bank of America published a report that attributed the rise of cryptocurrency values to interest from financial institutions. As institutional investors start to offer cryptocurrencies in customized products, the Bank of America forecasts that it might influence the market capitalization and liquidity of these currencies.
Financial institutions in Europe have been proactive in devising new products featuring cryptocurrencies. For instance, investors can monitor the price of ethereum with exchange-traded notes on the Nasdaq exchange in Sweden. The financial regulator in Switzerland has accepted a Falcon Bank product that allows its’ customers to engage in bitcoin trading. Banks in America are now doing the same.
Reportedly, Goldman Sachs has put bitcoin trading on its’ agenda, and JP Morgan released a P2P payment network founded on the ethereum blockchain in October 2017. These activities could result in further price increases throughout the industry.
The Involvement of Asian Markets
China and South Korea might have taken a negative attitude towards bitcoin mining, however that has not deterred cryptocurrency investors in these countries. Some reports say that Chinese and South Korean investors are prepared to pay premium prices to acquire bitcoin and other cryptocurrencies. Actually, several bitcoin trades conducted on the OKCoin exchange in China have exceeded the value of $6k already.
Regulations in South Korea have led to a restricted quantity of cryptocurrency. Consequently, the demand for these assets has risen. Due to this, the ethereum market in South Korea is now bigger than it is in any other country.
Earlier in 2017, Japanese authorities allowed bitcoin to be used as legal tender. Many people in Japan have now set up a bitcoin wallet, so they can send payments using a private key and digital signature technology. The registration process for virtual currency exchanges began on April 1, 2017. Every exchange that operates in this space has to be approved by the FSA to carry out virtual currency transactions in Japan. By September, eleven Japanese companies were registered to operate as cryptocurrency exchanges. Throughout 2017, more than forty-six percent of Bitcoin trading transactions occurred in the country. The resultant demand from this part of the world could raise cryptocurrency prices in the not too distant future as well.