Experts agree that the recent surge in the price of Bitcoin does not guarantee a long-term reversal.
The price of Bitcoin is as likely
to fall again as it is to continue rising, as the value of cryptocurrency is determined by supply and demand, just like anything else people want. If demand increases faster than supply, the price rises. Currently, only a few major companies accept Bitcoin directly or indirectly through a third-party digital wallet application, including Microsoft, PayPal, Overstock, Whole Foods, Starbucks, and Home Depot.With inflation high, stock markets collapsing, and investors fearful about the Federal Reserve's bold new monetary policy, some investors are considering investing in Bitcoin. The decentralized algorithmic stablecoin is destined to be backed by a mix of digital assets, including Bitcoin. Some experts also believe that TerraUSD (UST), one of the largest stablecoins, played a role in Bitcoin's crash last week. If Bitcoin continues on this trajectory as it has in the past, investors are seeing a significant rise in both the short and long term future.
Currently, there are 18.5 million Bitcoins in circulation, or about 88.4% of Bitcoin's total supply. But there is another factor at play in cryptocurrency markets recently, which has helped Bitcoin go even lower. And many investors are considering the juxtaposition between digital currencies such as Bitcoin which have a verifiable scarcity and fiat currencies such as the US dollar which are apparently printed unlimitedly. The number of places where Bitcoin and other cryptocurrencies are accepted as payment is growing rapidly. In other words, embedded Bitcoin is a synthetic form of inflation because a Bitcoin reward given to a miner adds new Bitcoins to circulation. Given its history of volatility and the current market conditions, it is difficult to predict whether or not Bitcoin will continue to rise in value.
However, with more companies accepting it as payment and more investors considering investing in it, it is possible that its value will continue to increase.
