After the price of Bitcoin peaked at $ 20,000 in 2017, it fell back to around $ 6,500 and returned to near $ 9,000, still falling by more than 50% relative to the highest point. However, Bitcoin’s price trend has never left Bitcoin’s “true believers” disappointed. After each sharp decline, it is able to rise again strongly, so although prices have fallen sharply, many investors still believe that bitcoin will continue to rise. Some even have very high expectations for bitcoin prices in 2018, $ 30,000, $ 60,000, or even $ 100,000.

A bit of research on Bitcoin’s price and soon you will realize that bitcoin has grown into a giant, and that a 100-fold rise like 2016–2017 seems difficult to achieve. At the current price of $ 9,000, the number of Bitcoin that have been dug up to now has reached 17 million, and the total market value has exceeded $ 153 billion. If the price of Bitcoin rises to $ 30,000, the market value of Bitcoin will reach $ 501 billion. If the price is calculated at $ 100,000, the market value will be $ 1.7 trillion.

1.7 trillion?

In 2017, the United States’ GDP was 19 trillion. That is to say, if Bitcoin really rises to 100,000, the total market value of Bitcoin will be close to 9% of US GDP. The current market value of Bitcoin is only 0.8% of US GDP. In other words, if bitcoin rises to $100,000, its market value will increase by 8% of the US GDP. It should be noted that in the past 20 years, the annual GDP growth of the United States has basically been between 1% and 2%. To support Bitcoin’s growth, the funds and resources needed will be astronomical.

Bitcoin prices will usher in the second wave of modest, sustained rises as bitcoin’s real use value increases.

Value is always the basis of price, and the greatest value of Bitcoin lies in its property of “common currency without borders”. But Bitcoin is not always a “conventional product” — its price fluctuations are too severe. Whether as a value storage tool or a payment instrument, drastic price fluctuations are not a blinding cure for the value of Bitcoin. The main reason for the sharp fluctuations in bitcoin prices over the past few years is that the value of Bitcoin has not yet been widely recognized, and its market value is very small, resulting in a certain amount of funds or resources entering or exiting Bitcoin’s market. Dramatic price fluctuations have led to the failure of Bitcoin’s “currency” use value.

In the process of rising and falling, Bitcoin has grown into a product with a market value of more than $100 billion, and as bitcoin values ​​are gradually recognized, a large number of consortia and financial giants have begun to lay out Bitcoin. It can be predicted that in the next five years, the volatility of Bitcoin’s price will gradually decrease. On the one hand, the huge market size will itself reduce the price fluctuations. On the other hand, the market pattern of chasing and selling will, to some extent, stabilize the huge fluctuations in the price of Bitcoin.

With a large enough market size (which can support large-scale payment/value/exchange transactions) and a relatively stable price volatility, Bitcoin’s nature as“borderless currency” will be truly understood. Go to the actual application. With the increase in the value of Bitcoin’s real use, Bitcoin’s price will usher in the second wave of moderate, sustained rise.

For the foreseeable future, the futures/options and other derivatives markets for bitcoin and other tokens will usher in a period of rapid development.

After Bitcoin’s price volatility gradually narrows, Bitcoin spot will become a relatively low-risk investment with stable returns. At this time, for users seeking high returns, futures/options based on Bitcoin and other tokens will become more attractive investments. On the other hand, as bitcoin applications are gradually developed and put into practical use, the risk management/hedge demand for bitcoin price fluctuations will rise rapidly. The application side will also need to manage the risk of the Bitcoin assets it holds by trading futures/options. Therefore, in the foreseeable future, the futures/options and other derivatives markets of Bitcoin and other various types of tokens will usher in a period of rapid development.

About us: since the beginning of its establishment, JEX platform’s positioning has been “a blockchain asset trading platform”. We focused on derivatives trading in the digital currency market and continuously launched various types of innovation based on industry development and user demands. We hope to provide global users with security, stability, integrity and quality services with our products.

JEX

05/04/2018

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