These graphs show the current price of BTC in US$. The question is, what are the expert Bitcoin price predictions for 2016?
Firstly, it cannot be denied that BTC ended 2015 in a very bullish mode. Despite a pullback of around 10% in the Christmas period, the preceding two months had seen substantial price rises. From lows in the $200s through much of 2015, Bitcoin began 2016 at around $420.
Why Is The Bitcoin Price Prediction 2016 So Bullish?
Summer 2016 will see the next halving. The algorithm that powers bitcoin produces a number of coins (25) every 10 minutes or so for miners that have solved math problems – these are the cryptography that enable the blockchain to verify all trades. Every 4 years the reward for miners halves, meaning that less news coins are created. This obviously means that new supply will become more limited.
Meanwhile, more services enable payment by bitcoin, more people are investing and trading and more money is coming in. Transaction numbers in recent months have shown that total volume of transactions is higher week after week. As demand rises – and supply becomes more limited – it seems reasonable to expect price increases. Additionally, the entire crypto currency and alt coin world has continued to grow and mature.
Bitcoins are really quite usable in the digital world. The likelyhood that bitcoin will survive and that mass adoption is coming are better than ever. The risks of BTC as a project failing are now very low. This reduced level of risk mean that more investors, more stores, more services and more users ought to continue to flood into the BTC economy in 2016 and that can only be good for business!
What Are Some 2016 Bitcoin Price Forecasts?
The end of the year saw a number of Bitcoin price forecasts in the mainstream media, some were more thought out than others, but here are a few highlights:
Reuters spoke to Daniel Masters (a hedge fund manager) who predicted “above $1,100 in 2016 and on past $4,400 by the end of 2017“. Bobby Lee from BTCC told Reuters that he thinks “as high as $3,500 by next summer“. Beyond bullish…
EconoTimes spoke to FXWirePro who suggested that “there is a probability for Bitcoin price to reach $630, and a break above could see the pair testing $680 levels“.
Bloomberg looked at some of the steps likely to be taken in 2016 by Bitcoin and their interviewed experts had some very positive thoughts, including the US government recognizing BTC as a currency, the first billion dollar startup and more. Though these are not individually price related, each one would provide another support under the price making the entire ecosystem safer and stronger.
BusinessInsider spoke to Jeremy Millar who explained hos thoughts for 2016. They include multiple blockchains and much greater adoption in emerging markets.
It wouldn’t be a real Bitcoin price prediction if there wasn’t someone shouting to the moon! So here is an opinion piece published in mid December suggesting that the price of BTC will one day pass $1 million. You can’t get more bullish than that!
My 2016 Price Prediction
I’m not totally sure that I agree with all of these forecasts, but honestly, who knows…? My personal best guess is that there is about a 30% chance that the price will double during the course of 2016 – that implies a price of around $800 to $850.
That all sounds very scientific, but it is based on “feel” as much as anything. Even if I am wildly incorrect, it seems very unlikely that there will not be strong rises, so perhaps the $630 to $680 numbers mentioned above are a good guide.
In case it is unclear so far, China is very influential in the role of Bitcoin. There are several reasons for this – one is that most of the main mining locations are in China. (They realised that rather than manufacture the equipment to mine BTC and then sell it to the west, they were better off making the equipment and then mining the coins themselves).
Plus, the Chinese have very few options when it comes to investment and diversification, so many people like the idea of buying some bitcoins. This makes it very likely that if the Chinese economy, currency or stock market starts to falter in 2016 that many Chinese will pile into crypto currency.
Additionally, there are many wealthy Chinese that look to diversify themselves and their families out of China, using mechanisms such as offshore companies and citizenship by investment. The result is that it is very likely that 2016 will see substantial Chinese wealth pour into BTC.
In fact, there is growing evidence to suggest that investment portfolios can be given additional diversification benefits by adding Bitcoin as a separate asset class. It is another reason to be a little bullish…
What I am sure of is that if the price starts to move up strongly, then money will flood in and the price will rise incredibly quickly. The real question then becomes when and how far will it fall back? It could very easily be the case that the price rises strongly, beyond $1000 but then falls back significantly, leaving us with a significantly higher price, but with another wild ride in between.
Therefore, my prediction is that there will be lots more price volatility and until we get to a stage where that comes under some control, it will be hard for businesses to really plan and build their companies around BTC.
Good luck to us all, and of course, to the moon!
Update – 20th January 2016
The events relating to Mike Hearn and Cryptsy in early January dealt a blow to lots of the more bullish forecasts. In just a matter of days the price dropped from over US$455 to around US$360. While the price is currently moving up again, such sudden volatility and downwards(!!) makes the above predictions look bad…