Bitcoin’s Fabulous Year as It Was


Published on 31 Dec. 2017
Bitcoin year

The year that is coming to an end in a few hours has become a prominent one for the first cryptocurrency. Some call it a basis for the new economic model, and others – the most prominent financial bubble in the history.

In this article, we are going to dive into history and examine some of the most significant moments of the year, when the price has been growing from less than $1000 to the highest mark of $20 000.

It was a year that exceeded the most daring forecasts. Could anyone, especially financial experts, even guess such a growth in mere 12 months?

China and PBoC, Round One

After the symbolic mark of $1000/BTC at the beginning of the year, and then a local maximum of $1165/BTC, Bitcoin stopped its rapid growth due to the following events. The biggest at that time Bitcoin market was imposed to some regulatory restrictions. At first, due to the lack of information, the restrictions had caused panic, and the price of cryptocurrency dropped to $800. The Public Bank of China (PBoC) had started the audit of the Chinese cryptocurrency exchanges because of the money laundering suspicions. The inspection resulted in the prohibition of margin trading on those platforms. After that, Bitcoin price grew and exceeded $1000 once again.

The next stroke the PBoC delivered as soon as February when it decided to tighten the control over the dominating Bitcoin exchanges, the so-called Chinese “Big 3” – BTCC, OKCoin, and Huobi. The bank announced its recommendations on the risks of cryptocurrency investments and expressed concern about the attempts to circumvent restrictions of the Yuan withdrawal outside the country. Chinese cryptocurrency exchanges were made to pause the withdrawal of fiat funds until all their users pass the expended KYC verification. Eventually, on June 1, OKCoin, BTCC, and Huobi announced the possibility to withdraw money, and up to autumn, China didn’t influence the global Bitcoin market.

Winklevoss Brothers and Bitcoin ETF

While Chinese exchanges remained in isolation from the global Bitcoin trading, other factors started to influence the price. First, it was the expectation of Bitcoin ETF launching. The first application had been made to the Securities and Exchanges Commission (SEC) by the Winklevoss brothers. SEC was to consider the request for the launching of the Bitcoin exchange-traded fund to the March, 11. Due to that information, the price of Bitcoin started to grow and exceeded the ounce of gold for the first time.

The rush around the event happened before one of the world biggest derivative Bitcoin exchanges announced the launching of the new futures contracts, which would allow traders to place stakes on the SEC decision about the Winklevoss’ application.

Before the Securities and Exchanges Commission announced its decision, the price of Bitcoin had set a new historical maximum of $1350/BTC. When the brothers received a refusal, the rate decreased by almost 30% that day and appeared to be within $1000 again.

Despite the failure of the Winklevoss brothers, several more companies decided to receive the permission for the Bitcoin exchange-traded fund. It was unsuccessful either; particularly, at the end of March, SEC denied SolidX in creating ETF, though it hardly influenced the market. 

In winter, when Bitcoin price approached $13 000, Winklevoss twins received their reward by becoming the first Bitcoin billionaires.

Summer: Time to Gain Strength

At the beginning of May, Bitcoin reached $1500/ВТС, and during the month its price doubled.

The primary cause of growth was the signing of the Segregated Witness activation agreement in New York. However, it had a small addition about the further increase of block size to 2 Mb, which caused serious consequences in the future.

Due to the crazy interest to Bitcoin and its increasing value, the record indexes were fixed in the world and particularly on the p2p platform LocalBitcoins in Ukraine.

One of the most exciting events of the summer was the Wall Street analytics entering the game of Bitcoin price prognosis. At the beginning of June, the American billionaire Mark Cuban startled the cryptocurrency fans by his announcement that Bitcoin resembled a “bubble.” However, he said he started to follow it by subscribing to Inside Bitcoin newsletter and recommended doing it to his followers. 

Goldman Sachs (one of the biggest investment companies in the world) predicted that Bitcoin, despite a possible deep fall, would continue to grow. 

Sheba Jafari, a Head of Technical Strategy Department at Goldman Sachs, had expressed a thought in her message to the clients that Bitcoin price would reach $4000, which soon came true. As for the financial analyst Ronnie Moas, he underestimated the Bitcoin’s potential predicting that its price would grow to $5000 by the end of 2018.

August became a turning point for Bitcoin - two events that caused its further growth took place. On August 1, Bitcoin Cash hard fork took place within the Bitcoin network. The price started to increase since everybody wanted to receive coins out of nowhere because of the split. And on the 24th of September, a Segregated Witness solution was activated, ending up a two-year epic of its implementation.

Bitcoin started to gain more popularity in the world. In Dubai, two business gurus, a baroness Michelle Mone and Douglas Barrowman announced a real estate selling for Bitcoin (about 220 thousand square meters). Also, those who rented apartments in London had now the possibility to pay with Bitcoin. In Kyiv, first six test cryptomats that allowed buying Bitcoin for cash started to work.

China and PBoC, Round Two

At the beginning of September, China appeared in the cryptocurrency news headlines again. The PBoC management stroked cryptocurrency community once again. And though the shot was not directly on Bitcoin, the full restriction of ICO in the country had a significant impact on the cryptocurrency price.

Only a few days after the ICO prohibition, the PBoC targeted Chinese cryptocurrency exchanges: the financial regulator forbade trading to Yuan. Also, the rumors about Bitcoin mining restriction appeared (80% of world mining is concentrated in China); however it didn’t happen. Nevertheless, China lost its previous authority on the Bitcoin market, and the majority of analysts considered it as a favorable event for the cryptocurrency.

Golden Autumn

The middle of October meant the new heights for Bitcoin. Bernstein company analysts, located in New York, stated that Bitcoin was “a class of assets, not liable to the censorship,” but not precisely money.
 
In the countries with the weakened economics cryptocurrencies gained enormous popularity, and in Venezuela, they helped the locals to survive. Some states imposed fines for using Bitcoin as the means of payment.
 
When the real evidence that Wall Street was going to enter Bitcoin market had appeared, its price started to rise at the unprecedented pace, exceeding $10 000 by the end of November.

Start of Bitcoin Futures Epoch

In expectation of futures trading, the rate grew at a frantic pace, adding to its price $1000 daily. On December 10, the biggest futures exchange CBOE  started Bitcoin futures trading, which caused the new height of $17 000. The climax for the most popular cryptocurrency took place on December 17, the day before one more derivative exchange, CME, was to launch futures trading. Then, Bitcoin crossed the mark of $20 000.

However, several days after that, December 22, a deep correction was observed on the market, when the price of Bitcoin decreased to less than $13 000. After that, the rate increased to $17 000 for a short period. Today, on the last day of the year, Bitcoin costs around $13 000.

Future Prognosis

The time will show what awaits Bitcoin and other cryptocurrencies. At the moment, the Wall Street cryptocurrency analyst and co-founder of research center DataTrek Nick Colas says that in 2018, Bitcoin can experience critical course jumps, fluctuating between $6500 and $22 000.

Investopedia, the biggest specific resource, devoted to the investing education, called Bitcoin a term of 2017, emphasizing the fact that cryptocurrency had become mainstream in the financial world and the inevitable part of the economic system.

2017 was unequivocally the year of Bitcoin. So what cryptocurrency is going to be the most successful in 2018? Maybe, Ethereum?

 

 


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