Every speculator and pundit on Bitcoin has a theory to explain the virtual currency’s remarkable rebound in 2016.
It has more than doubled its price over the past 12 months. Yesterday, on New Year’s Day, Bitcoin surpassed the $1,000 barrier. It’s hovering around the $1,030 mark as of noon, U.S. Eastern Time
Experts quoted in various published reports expect Bitcoin to surpass its $1,165 peak, achieved in November 2013, during the first few weeks of 2017. The more bullish among them project a $2,000 price later in the new year. However, many uncertainties remain — and history could repeat itself with China as a big player.
Bitcoin has been propelled by numerous factors, including rising interest rates — especially since the U.S. presidential election in November — and an influx of new money, with speculators possibly seeing the virtual currency as a new “gold” — a safe-haven financial instrument. But Bitcoin remains vulnerable to its usually bearish pressures, including possible renewed crackdowns by Chinese government officials (actions by China was a big factor in Bitcoin’s price collapse in early 2014) and law enforcement agencies. Bitcoin still has a tendency to be associated with money laundering and other criminal activity.
Writes Quartz about China’s continued influence: “China is arguably even more influential over bitcoin now, as the most powerful miners of the cryptocurrency, responsible for processing transactions and releasing a steady supply of new coins into the monetary supply…”
China has had a big role in Bitcoin’s price run-up in the past year. with bitcoin-yuan trade surpassing bitcoin-dollar volumes. There is some concern that Chinese buying of Bitcoin may lead to another crackdown by the People’s Bank of China (PBOC), which in 2013 banned financial institutions on the mainland from dealing in Bitcoin.