Bitcoin outperformed all currencies on 2016, increasing from US$433 at the beginning of the year to $794 year-to-date. Recording an annual gain of 54%, the price of bitcoin is expected to pass $800 shortly. While bitcoin solidified a strong performance this year, the majority of leading reserve currencies including the USD, CNY, JPY and GBP stumbled.
Most currencies in the top 10 including the Chinese yuan, British pound and Indian rupee ended up recording significant annual losses, with the Chinese yuan demonstrating drastic devaluation, the GBP reaching one of its all-time lows and the Indian rupee falling behind as well.
How Bitcoin Sustains Rapid Growth & Price Increase
Coincidentally, most of the reserve currencies above mentioned that failed to meet the expectations of investors, businesses and traders are still currently undergoing severe economic and financial instability. The Chinese yuan, which showed an annual loss of 6%, declined substantially despite the government’s desperate attempt to prevent devaluation. Experts predict that as the Chinese New Year approaches, a larger amount of cash outflow will be requested and the Chinese yuan will decrease in value even more.
The British pound also had one of its worst years in recent history after its decision to exit from the European Union. The value of the British pound plunged almost immediately after the announcement was announced, leaving the economy in panic and chaos.
Amid this global economic turmoil, bitcoin recorded a 54% increase in value mostly due to increasing realization of bitcoin as a store of value and the general population’s development of awareness towards the devaluation of cash and excessive financial control of the government.
For instance, when the Chinese government announced a major plan to crackdown on wealth management products (WMPs), which amounted to over $3.9 trillion, the demand for bitcoin surged, pushing the price of bitcoin to 5,000 CNY in the Chinese bitcoin exchange market. Investors and traders were buying bitcoin at a 10% premium to ensure that their wealth is not affected by tightening regulations imposed by the local authorities.
Also, as previously covered by Bitcoin.com, best-selling financial author Holger Zschaebitz discovered a correlation with assets like gold and bitcoin. Zschaebitz noted that whenever precious metals like gold declines in value, the price of bitcoin rises, implying that investors and traders are beginning to see bitcoin as the global safe haven asset instead of gold.
Two of the major factors that allowed the mainstream population to acknowledge the benefits and advantages of bitcoin over traditional forms of money is bitcoin’s transportability and decentralized nature. The fact that bitcoin can be sent anywhere to anyone in the world without the presence of a third party or regulation of the government played a vital role in the increasing value of bitcoin.
These two features of bitcoin-enabled individuals in chaotic economies such as Venezuela and India pushed the general population to depend on bitcoin to avoid a crackdown on cash and government’s confiscation of physical assets such as gold.
Bitcoin Against Altcoins, End Year Prediction
Bitcoin also outperformed currencies within the cryptography space, easily surpassing the growth rate and market cap of 118 altcoins. Bitcoin’s unprecedented price development and growth are evident in a chart introduced by Willy Woo, a cryptocurrency enthusiast, and operator of Woobull.com.
Various experts including August Capital partner and former Salesforce executive Villi Iltchev predicted bitcoin to cross the $800 mark before the end of the year as there exists many currencies and assets that are trustworthy. Bobby Lee, CEO of BTCC also noted that bitcoin is set to pass $800 shortly.
Do you think bitcoin will pass $800 before the end of the year? Let us know in the comments below.
Images courtesy of Woobull, IBTimes