In a Reuters article published today, bitcoin price is speculated to see a bullish spike in 2016 due to the upcoming halving of mining rewards, due to happen in July 2016.
Bitcoin has had a memorable year. Wider adoption; increased trading; the Silk Road investigation with its corrupt agents and bitcoin auctions ; a Russian Ponzi scheme operating in China; various economic factors in China; the recent ‘unmasking’ of Satoshi Nakamoto in the form of Craig Wright; Wall Street’s fawning over blockchain technology while predictably ignoring bitcoin among other incidents have all been factors in thrusting the cryptocurrency under the mainstream spotlight.
As we approach the end of the calendar year, a Reuters article published today highlights 2016 to be the year where Bitcoin price surges again.
Discarding the notion of darknet drug places and seized bitcoins as well as Ponzi schemes, the publication cites “age-old principles of supply and demand” as the primary reason for a surge in bitcoin price in 2016.
Speaking to the publication about reward halving, Jeremy Millar, a partner at a Fintech firm in London said:
It (the reward halving) dampens supply, so, all other things being equal, that puts an upwards pressure on price.
No one can argue with that fundamental economic principle.
Reuters took its references from Daniel Masters, a former Shell oil trader who joined the bitcoin brigade in recent times. Masters is now the co-founder of Jersey-based Global Advisors, a multi-million dollar bitcoin hedge fund. If the last name rings a bell, Daniel Masters is also the ex-husband of Digital Asset Holdings CEO and former banking executive Blythe Masters.
Masters cites a multitude of factors for a bitcoin price surge, such as:
Striking a parallel to the oil sector, an industry where Masters traded oil for three decades, Masters said:
If OPEC (Organization of the Petroleum Exporting Countries) came out tomorrow and said, ‘in six months’ time, we’re going to halve oil production’, the price of oil would instantaneously react.
He added to the statement noting that the bitcoin industry and market is still in its infancy. He also contends that the factor of rewards being halved will have a significant impact, stating:
I don’t think that factor [reward price halving] is discounted into the price fully.
Masters sees bitcoin price challenge the heights of 2013 of over $1,100 next year. He speculates that the cryptocurrency will only rise further to reach $4,400 by end of 2017.
The publication also spoke to Bobbly Lee, the CEO of BTCC, a leading bitcoin exchange in China. The executive sees the months leading up to reward halving affecting bitcoin price to such an extent that bitcoin price will scale as high as $3,500 in summer 2016.
Lee also compared the value of bitcoins in circulation in proportion to the population of the world.
Today, the worth of bitcoin is $1 per capita in the world (the world’s population). For such an innovative, decentralized digital asset, I say ‘boy, are we undervaluing it’. But, it takes a while for people to realize that.
Featured image of the Atlantis space shuttle from Shutterstock.