The total value of Bitcoin transactions is on track to exceed US$92bn this year, up from less than US$27bn in 2015, according to a study by the UK-based mobile, online and digital market intelligence specialist Juniper Research.
The research found that transaction volumes continued to be concentrated overwhelmingly on the exchanges, with Bitcoin now trading at values almost 50% higher than at the beginning of the year.
The firm’s study, entitled ‘The Future of Cryptocurrency – Deep Dive Data & Forecasting 2016-2021’, attributes the rise in values to three key factors:
Uncertainty over Brexit: The research argues that Bitcoin’s value is to a significant extent dependent upon economic uncertainty and political instability as investors seek safe havens for their assets. Bitcoin’s price rose in the weeks leading up to the June 23 referendum, dipped briefly but sharply when it appeared that Britain would vote to remain in the European Union (EU), before recovering when the true result became apparent.
Continued weakness of the Chinese economy: The overwhelming majority of Bitcoin trading occurs on Chinese exchanges, while the continued weakness of the Chinese economy has seen investors using Bitcoin as a haven against expectations of a further fall in the value of the yuan (CNY).
Reduction in money supply: The imminent ‘halvening’ – whereby the amount of Bitcoin being introduced by mining in a set time period will halve – is also pushing its price upwards.
According to Dr Windsor Holden, Juniper Research’s head of forecasting and consultancy, concerns around the prospects of a Trump Presidency in the US are also likely to cause further spikes in trading and Bitcoin value later in the year.
“If Donald Trump becomes president of the US, there is the very real prospect of turmoil on world markets – the Economist Intelligence Unit [EIU] ranks his presidency within the top 10 global risks,” he said.
“However, Bitcoin trading would thrive in such an environment, at least until the impact on major fiat currencies becomes clear.”
Juniper, which has also published the whitepaper ‘Will Bitcoin Bite Back?’ reports that its research also suggests that Bitcoin adoption in the retail space will remain limited to a niche audience, with only a small number of websites seeking to offer it as a payment option.
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