6 things that could catapult Bitcoin prices higher
If we’re going to see much higher bitcoin prices, we need a serious catalyst. Here are six potential game-changers for the cryptocurrency. If any of them come to fruition, I expect bitcoin prices to surge. And perhaps we’ll see that fabled $10,000 bitcoin price that many investors seem to be targeting:
1) Wallet integration with a major bank.
Bitcoin needs to partner with (not work outside) the mainstream financial system. It’s really the only way to grow the market beyond speculators and technogeeks. When everyday users can log into their Bank of America accounts and view/use bitcoin balances, we’ll have a serious currency on our hands.
2) The Winklevoss Bitcoin ETF gets approved by the SEC.
ETFs are “exchange-traded funds,” and they’re a way for stock traders to invest in commodities without having to buy the actual commodity. Here’s how it’d work: Say, I’m an everyday investor with a Scottrade account. I want to invest in bitcoin, so I look up the stock ticker for the bitcoin ETF (let’s say it’s “BTCC”). I could then place a “buy order” on Scottrade for 10 shares of BTCC. Per the Winklevoss’s S-1 filing with the SEC, they’ll buy 1 BTC every time someone buys five shares of BTCC. If someone sells five shares, they’ll sell a bitcoin. In that way, the price of BTCC should consistently trade at about 1/5th the price of each bitcoin. The ETF would open up bitcoin investing to legions of cash-bearing investors, and it would radically increase bitcoin trading volumes. I also suspect it would catapult the price of bitcoin higher – at least initially.
3) Big-box stores.
Even though Amazon’s said they’re not looking into bitcoin payments at the moment, that could change in the future. If Amazon, or another large retailer like Walmart, Target or Kroger, announced plans to accept bitcoin, the price of the digital currency could rise quickly.
4) China lightens up on bitcoin.
In December 2013, the Chinese government appeared to restrict financial institutions and payment providers from conducting transactions in Bitcoin (Notice No. 289). China has since softened its stance on bitcoin, but it’s still far from embracing the currency (learn more at BitLegal). If China ultimately loosens the reins on the currency, bitcoin prices would spike.
5) Paypal integrates Bitcoin.
Paypal announced interest in integrating bitcoin recently. If PayPal offered bitcoin integration, it would give the payment processor’s 148 million active registered accounts the ability to pay for goods with a cryptocurrency. PayPal integration would dwarf Overstock.com’s adoption of bitcoin. In Q1 of 2014, for instance, PayPal transacted $6,688 in Total Payment Volume every second. PayPal customers also made 834 million transactions in Q1 2014, or more than 9 million payments every day. If bitcoin were able to capture one percent of those transactions (probably an optimistic figure to start), that would generate more than $5.7 million in bitcoin transactions daily, and it would more than double the total number of bitcoin transactions that happen in a given day.
6) Economic turmoil.
One of the primary reasons bitcoin was created was to provide an alternative to fiat currencies that are manipulated by governments around the world. As debt loads grow under easy monetary policies in the U.S., Europe and elsewhere, the likelihood of high inflation or even a currency collapse increases. If either of those scenarios transpire, bitcoin could become a safe haven investment on par with gold, silver and real estate. If serious cash starts moving into bitcoin, the price of BTC will rise even as the nominal value of fiat currencies are falling.
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