Bitcoin Price Surpasses Gold, Continues To Rise

So far in 2016, Bitcoin prices have more than doubled — quoting around $874 after touching a high of $916 last week. At, Zebpay, one of the largest Indian Bitcoin exchanges, prices have increased from Rs 41,250 per unit to Rs 63,000. In November, it touched a high of Rs 69,500, an all time high due to over 40 per cent premium to international prices following a confidence crisis and due to an increased demand for alternative assets in India after demonetisation.

Analysts say China is the largest trader in Bitcoin and the Chinese buy it to hedge against the falling yuan, which is trading at an eight-year low. A recent remark by China’s President Xi Jinping that he isn’t wedded to China’s 6.5 per cent economic growth objective due to concerns about rising debt and an uncertain global environment after Donald Trump’s election victory in the US has further provided a boost to Chinese demand for Bitcoins.

With informal restrictions on gold import implemented by China since the last one month to curtail the outflow of Yuan, Chinese investors have found their safe haven in the cryptocurrency, resulting in the higher demand taking its price up further.

Sandeep Goenka, co-founder and director of Zebpay, said, “It was widely forecasted that Bitcoin prices would see a spectacular increase in 2016. Geopolitical events and a weak global economy led to a Bitcoin price increase from Rs 25,000 at the beginning of 2016 to around Rs 65,000 right now. In 2017, major technical upgrades are expected. Demand for Bitcoins will continue to increase. I believe in 2017, Bitcoin will touch all-time highs and end 2017 with a price that would be more than double the current levels.”

Compared to this, so far in 2016, the price of gold in India went up 11 per cent, while the price of silver went up by 17 per cent.

The bitcoin demand also got traction when EY (one of the Big Four accounting firms) announced: “Clients of EY Switzerland will be able to settle their invoices for auditing and advisory services using bitcoin. The advisory firm also put into operation a bitcoin ATM at its publicly accessible office building in Zurich. This ATM can be used by EY employees as well as passers-by to exchange Swiss francs for bitcoins and vice-versa.” This is first time an accounting firm has acknowledged bitcoin as a medium to make payment for its services.

This interest has seen a further uptick in India following the central government’s demonetisation drive, with leading Bitcoin exchanges seeing many inquiries and app downloads.

Sathvik Vishwanath, CEO of another big Indian Bitcoin exchange, said, “We have seen more than 250 merchants sign up during this month (for accepting Bitcoin) and this will push for higher adoption. Places where you can spend Bitcoin range from cafes, bus and air tickets, renting servers, buying discounted vouchers, mobile and DTH top-ups etc. Our recent integration with PayU also allows our users to be able to instantly buy Bitcoin anytime from their credit/debit card or net banking.”

While time will tell whether the price projection of it doubling in 2017 will come true, the sentiment for the cryptocurrency has turned bullish and most analysts say that its price is just 25 per cent away from its all-time peak of $1,161.

Business Standard