A large part of the crypto market is grounded in speculation and predictions. Cryptocurrency investments can be volatile but at the same time lucrative, which prompts crypto investors to think far ahead and adjust their strategies accordingly.
In this article, we’ll speculate on the future price growth of cryptocurrencies. First, we’ll talk about the key factors that drive their value, then we’ll trace back the ups and downs in Bitcoin’s price throughout the years to illustrate crypto volatility.
Finally, we’ll share the opinions of some renowned experts as to whether we should expect wider crypto adoption in the future and whether their prices are likely to increase over the long term.
Factors Affecting Crypto Prices
1. Scarcity
Scarcity, or the limited availability of cryptocurrencies, can have a major impact on crypto prices. For example, Bitcoin’s founder, Satoshi Nakamoto, decided to limit the total supply of bitcoins to 21 million BTC because he wanted to prevent inflation scenarios and give his coin scarcity. Right now, almost 18.5 million BTC have been mined.
However, despite the growing Bitcoin demand and number of network miners, it still takes 10 minutes to mine the next Bitcoin block because the mining difficulty increases as well. On top of that, every 4 years the Bitcoin mining reward gets cut in half in an event known as the halvening.
If the demand for Bitcoin grows at a faster rate than its supply, this will drive the price of Bitcoin up significantly. This supply inelasticity creates the potential for price volatility.
2. Utility
Widespread cryptocurrency adoption is only possible if people see they have numerous use cases. These digital assets are turning into global virtual currencies that will save customers a lot of money otherwise spent on service and transaction fees.
Cryptocurrencies are gaining support from major payment companies like PayPal, Visa, and Mastercard. With more consumers who prefer cryptocurrencies as a payment method, the number of merchants accepting them has increased as well. There are many interactive online maps that can help you locate these businesses.
Mainstream cryptocurrency usage coupled with limited supply and increased demand should inevitably lead to crypto price growth.
3. Regulations
Cryptocurrencies aren’t considered legal tender by any government around the world but they are acknowledged as a medium of exchange by some governments. In those countries, people can buy, sell, and trade cryptocurrencies without a problem or use them to purchase goods and services online.
The US, UK, Canada, and Australia, for example, treat crypto assets as property, which means they’re subject to capital gains tax as well. Experts believe that continued government acceptance of cryptocurrencies will lead to increased crypto prices.
4. Competition
Crypto prices are also affected by the existing competition between different altcoins. Even though Bitcoin is the first and most popular cryptocurrency, prominent altcoins like Litecoin (LTC), Ethereum (ETH), Bitcoin Cash (BCH), and EOS are gaining momentum as well. The market capitalization gap between these cryptos keeps decreasing.
Moreover, the initial coin offering (ICO) market has had a steady growth in the last couple of years, resulting in even more new tokens on the market. This widespread altcoin competition is beneficial for crypto investors because it keeps prices relatively stable.
5. Cost of Production
Even though cryptocurrencies are “mined” virtually, there are real costs involved in their production, depending on the mining mechanism they use. To mine new bitcoins, for example, miners use special mining hardware with plenty of computing power to solve an algorithmic problem, which is why they use a lot of electricity.
Research shows that the algorithm difficulty and rate of production are some of the main drivers of crypto prices.
6. Governance Stability
Unlike traditional government-issued currencies, cryptocurrencies aren’t controlled by a central authority. Their protocols are open-sourced for developers to contribute freely, and governed by a peer-to-peer network of miners or validators.
Proposed changes have to be accepted by the network majority, which typically takes longer. These changes are sometimes known as “forks” and can either be “soft” (minor software changes) or “hard” (creating a completely separate blockchain). Such governance disruptions can cause price fluctuations.
A Brief History of the Bitcoin Price
Bitcoin was launched in 2009 and was worth just a few dollars during the first few years of its existence.
In 2013, the digital coin started getting more exposure in the media. At this point, its price was only $13.50 for 1 BTC. By the end of October, one bitcoin was worth $100, then $1,075 by the end of November.
This was the year that China joined the crypto market and the number of crypto exchanges was on the rise. Due to the Mt. Gox security breach and the risks associated with crypto trading, in early December, the price dropped to $760 and remained highly volatile.
In mid-2015, the price of one bitcoin was around $300. This is when the second growth period started so that by January 2017, the coin was worth around $1,000 again.
However, the biggest Bitcoin rally started in October 2017, when 1 BTC equaled $5,000. By November the price doubled to $10,000 and then hit its all-time high of $19,891 in late December, shaking up the crypto community and breaking into the public consciousness.
Unfortunately, this glory didn’t last long and the Bitcoin price tumbled down to $3,500 by November 2018.
In June 2019, it rose back from the ashes and towered to $10,000. The market crash in March 2020 that affected stocks and precious metals didn’t leave Bitcoin or the crypto industry unaffected either. Bitcoin dropped below $5,000, but quickly regained its upward price momentum and has once again comfortably regained the $10,000 level.
Crypto Price Predictions for 2030
When it comes to future crypto price growth, the majority of experts and crypto analysts share a positive outlook.
They believe that growing interest in stablecoins and central bank digital currencies (CBDCs) by central banks around the world means that the world is getting ready to accept cryptocurrencies as a payment alternative in this tech-driven era. Interest from institutional players normally creates bullish markets.
In an interview for Forbes, Bloomberg analyst Mike McGlone has said that this year’s Bitcoin halvening might be a catalyst for its price to go as high as $20,000 by the end of the year. This can produce a chain-reaction and increase the price of altcoins too.
Moreover, the second-largest cryptocurrency, Ethereum, is getting ready to launch the Ethereum 2.0 blockchain. This is an anticipated event because it marks Ethereum’s shift from a Proof of Work to a Proof of Stake consensus mechanism. Some experts believe this will attract plenty of new crypto investors.
Experts also believe that by 2030 technological advances will help cryptos overcome their issues with scalability and cybersecurity. Whatever the odds, one thing is more than certain – cryptocurrencies aren’t going anywhere! The industry is going to get bigger, and with that, the prices should go higher.
Investors who want to benefit from cryptocurrencies and their tremendous possibility for long-term price growth would do well to invest in ways that allow them to maximize their returns. With a cryptocurrency IRA, for instance, investors can benefit from cryptocurrency price growth while retaining the same tax advantages as conventional retirement accounts. They can even roll over assets from existing tax-advantaged retirement accounts into a cryptocurrency IRA.
If you want to learn more about cryptocurrency IRAs and the ways that investing in cryptocurrencies can benefit your retirement savings, contact Coin IRA today. As one of the pioneers in the cryptocurrency IRA industry, our representatives have plenty of experience helping investors just like you make cryptocurrencies an important part of their investment portfolios. Don’t wait for cryptocurrencies to double in price again before you make your move. Get started in cryptocurrencies by contacting Coin IRA today.
This article was originally posted on Coin IRA.
