Bitcoin has experienced an overall rally since the beginning of 2019, with its price increasing from around $3,750 to over $4,000 at the time of writing.
This does not necessarily mean that the cryptocurrency has become a good investment or will continue to grow, however, a fact which is recognised by experts and financial analysts.
Technical analysis by Bloomberg found that buying demand for Bitcoin was falling shortly after the cryptocurrency logged its first major growth of the year.
Consensus from investors seems to be that the cryptocurrency remains too volatile and speculative to be a concrete investment, although there is still great interest in the Bitcoin blockchain from enthusiasts and businesses.
MyBroadband spoke to blockchain expert Simon Dingle about Bitcoin’s price movements this year, along with the changes coming to the blockchain in the near future.
Dingle said that predicting the price of Bitcoin is impossible, especially with the amount of speculative buying occuring in the market.
“Bitcoin is still susceptible to price manipulation and the market is a poor indication of actual adoption at the moment,” Dingle told MyBroadband.
“It’s impossible to predict what the price will do in the future, but I wouldn’t expect any fireworks until after the next halving event, when the rewards paid to Bitcoin miners are adjusted.”
This halving event is only expected to occur next year, meaning it could be a while before we see extreme price movements again.
“We also need to see more fiat flowing into the ecosystem to drive sustainable growth,” Dingle said.
This means investment in blockchain technology by financial institutions and specifically the adoption of Bitcoin by users and companies alike.
Dingle added that users should be very careful about investing in Bitcoin this year due to the volatility of the market.
“Right now the bulk of trading is between cryptocurrencies and technical analysis is about as accurate as astrology in terms of making solid predictions,” Dingle said.
“I’d urge people not to spend money they can’t afford to lose on investing in this space. The days of volatility are far from over.”
Bitcoin’s image problem
If Bitcoin is to gain adoption and further fiat investment, it needs to improve its image in the eyes of the everyday Internet user.
“Technology itself is never a driver of adoption. Bitcoin needs to tell a better story and escape the negative publicity it has accumulated about being exclusionary and wasting resources, as just two examples.”
“Neither of those things are true, but they have fuelled the mainstream understanding of the technology,” he noted.
“People don’t care what is technically possible, they care about what it means for them.”
Improvements are constantly being made to the Bitcoin blockchain along with existing solutions increasing in their scope and adoption, and this is expected to continue throughout the year.
One of the biggest changes recently deployed on Bitcoin is the Lightning Network.
“The most exciting advancement is the Lightning Network, which is steadily growing and brings new efficiencies to Bitcoin payments,” Dingle said.
“With incredibly fast, low-fee payments there are new use cases emerging, such as using Bitcoin to quickly pay for things in games.”
“Scaling Bitcoin through protocols, in the same way that the Internet itself did, is preparing it for the next phase of growth and is reestablishing its original intent of being peer-to-peer digital cash.”
Dingle added that there are steady improvements being made in offline payment mechanisms for Bitcoin and the user experience of buying and storing cryptocurrency.
“All of this is good stuff, but meaningless if we can’t fix the broader perceptions surrounding Bitcoin,” he said.