The value of Bitcoins rose unexpectedly in 2017. As the interest of media increased in the value of Bitcoins, it also caught public’s attention as well. Before the media spread its fame, it was restricted to a specific segment of people only and the general public didn’t know much about it. However, now there are speculations about Bitcoins’ expected downfall after it has seen a very high time.
Currently, Bitcoins is at a value galloping above 13,000 Dollars, but experts are predicting that it might see a downfall soon. On the other hand, some experts believe that the increased demand for Bitcoin may cause its value to increase further and reach a mad-high rate of US$40,000 by the end of 2018.
Panos Mourdoukoutas, an economics expert, has predicted that two events may cause the decrease in Bitcoins value, and can bring it back to 1000 Dollars.
“There are a couple of things that could kill the hype for the digital currency and help push demand in the opposite direction. One of them is a Lehman or Enron-style fraud event, not necessarily in the Bitcoin market, but in some other cryptocurrency market, which brings to mind the wild west mentality of mid 19th-century capitalism.”
According to this statement, a major cryptocurrency fraud event could depress demand for Bitcoin in two ways. One of these is a ‘run on the bank’, kind of panic since fear replaces greed. This would give a major excuse to governments and big banks to tone down the growth of ‘people’s currency.’
“The second thing would be the end of easy money. That would push interest rates higher. and take the “air” out of the Bitcoin bubble that has turned into a mania.”
Here, it should be noted that the 10-yr US Treasury yields have already edged closer to 2.5% almost a point higher than a year earlier. High-interest rates can put pressure on Bitcoins demands in a few ways. Firstly, high-interest rates raise the ‘opportunity cost’ of money used to buy Bitcoins. Especially those investors who buy Bitcoins with borrowed money and are expected to face ‘margin calls’ if the worth of digital currency falls all of a sudden.
Panos analysis is important and has its value too, but it must be noted that Bitcoin’s underlying technology is Blockchain, and the same protocol can be used to create more cryptocurrencies as well. Already existing digital currency through the blockchain concept are Bitcoin cash, Ethereum, Ripple, Litecoin, Monero and few other coins. So in case, Bitcoins expected downfall actually occurs, there are other cryptocurrencies that can be used by people to work for their cause again.