Bitcoin is the most famous cryptocurrency or virtual currency. It has become famous due to its recent skyrocket in December last year where the price rose from $1850 to $19000 but after some days it dropped again to $12000 dollars the next month. This volatility brought dreams of becoming rich overnight but has not been that promising.
Bitcoin is at around $6300 and rising a bit. The question is where will it go now?
Many people are telling that it will skyrocket and even I feel it will by looking at their logics and market behaviour possibility but people have forgotten about some factors which according to me will be big barriers against bitcoin's rise.
1)Bitcoin mining: Now let me tell you what is mining first. Mining is a process by which computing power is used to process and approve the thousands of transactions of bitcoin and the miners who perform mining with their mining hardware get bitcoin(small amounts) as a reward. Bitcoins transact in a block in the blockchain(a public ledger) . Then there is the mining difficulty which keeps increasing with time. And with increasing difficulty the mining will become less profitable and with decreasing profitability the number of miners will also reduce.
And as I said in the starting that mining is done to transact bitcoins, the speed of bitcoin transactions will reduce and one day mining difficulty will become so high and unprofitable that all miners will stop mining and bitcoin will get locked in the network. Though this theory can take place it hasn't yet as people are trying to find new and cheaper ways and algorithms with better profits but this theory can come true in the future.
2)Negativity and Fear among people: People have become quite negative and fearful when it comes to buying bitcoins and other cryptocurrencies due to its frequent fall in prices.
- Rejection: Many country have banned bitcoin like Bangladesh and some Middle East countries as their central banks don't want competition to their money monopoly.
These were some negative factors which can reduce bitcoin's price.
Now here are some factors which can result in bitcoin's RISE as well.
1)The upcoming bitcoin ETF: The Bitcoin ETF which is coming up if approved by SEC can result in skyrocketing of bitcoin's price as trillions of dollars can gush into the crypto market and increase in bitcoin's price can make mining profitable and remove the first negative factor.
- Visiting of institutional investors can also gush in a lot of money and remove the doubts which are refraining people from buying and using bitcoins.