Popularity of Bitcoin. Cause and effect.
The Bitcoin cryptocurrency has shown unprecedented growth over the past few years; the rate of the virtual currency has increased thousands of times.
How did it happen that data in computer memory turned into real money, and its value surpassed the value of gold?
This happened for two obvious reasons - the conditional anonymity of the crypto currency and the massive advertising campaign launched by those who release new crypto currencies.
The advertisement is engine of the trade.
Recently, not a single day goes by without news about crypto currencies, either a large company decided to use this instrument in its calculations, or another state recognized crypto as a means of payment.
Analysts’ statements about the undervaluation of Bitcoin play an important role; the most optimistic forecasts already predict the cost of this crypto currency at several tens of thousands of US dollars.
Constantly growing demand.
Massive advertising and a dynamically growing exchange rate encourage people to actively open wallets for Bitcoins. Every new investor hopes to increase their wealth at least several times. Moreover, there are thousands of clear examples, because crypto currency has risen several times in price in just half a year.
The number of active Bitcoin wallets has already reached 10 million, four years ago this figure was 2.6 million.
As you know, growing demand with a limited quantity of a product leads to an increase in price. As long as the number of people willing to buy cryptocurrencies grows, its value will also increase.
What can we expect in the future from virtual currencies?
In the near future, these assets will grow, the price increase will continue for several years, after which a collapse will occur.
Moreover, new products will become more expensive, since already at the moment, investments in popular cryptocurrencies bring several times less profit than the purchase of new cryptocurrencies.
The exchange rate will still be unstable; fluctuations can reach up to several percent throughout the day.
Why is the forecast so pessimistic?
We should not forget that cryptocurrency for its existence requires large energy costs; now, to maintain Bitcoin, an amount of electricity is required comparable to the expenses of a country like Slovenia.
And given the prospects for the growth of electricity and its possible shortage, it is not difficult to predict how this shortage will hit cryptocurrencies.
Therefore, I would not invest in crypto for more than two years; every day the likelihood of a trend reversal only increases.