Last Friday bitcoin’s value rose above gold for the first time, enthralling headline writers across the tech press. Its price of $1,290, compared to gold’s $1,228, led some to laud the arrival of a new era in which the cryptocurrency, once a vilified and mistrusted innovation, would ‘go mainstream’.
Many experts urged reflection. Gold was having a rough time, and besides, bitcoin, while having enjoyed a huge surge from a $407.98 low last March, has a market value of $20 billion compared to gold’s $7tr.
More importantly, Sandeep Goenka of bitcoin exchange Zebpay tells Red Herring, was that the currency “is maturing and becoming more global.
“I do think that increasing demand and halving of supply last year means prices naturally will continue to be on a bullish trend, like they have been in all of bitcoin history,” adds Goenka.
Adam Davies, of Altus Consulting, even told CNBC this week that he expected the price of bitcoin to reach $3,000 by the end of 2017, thanks to demonetization in India, volatility in the global economy and, possibly most importantly, increased Chinese regulation.
Bitcoin’s recent success has been attributed largely to China, whose weak renminbi currency has resulted in a scramble for bitcoin. 42% of all bitcoin occurred across Chinese exchanges in 2016, according to a New York Times report.
But yesterday, as bitcoin enthusiasts were reaching for the champagne, its value suddenly dropped by more than $100 in minutes. Today it continued to slide, as the People’s Bank of China (PBoC) suggested that recent bitcoin regulation would not be temporary.
The country’s three largest exchanges, Huobi, OkCoin and BTCC, all announced they would continue to block bitcoin withdrawals until a March 11th deadline for the PBoC’s regulation. As that date falls on a Saturday, the decision will likely be delayed until the 13th.
That leaves bitcoin traders and experts in limbo. Just as China gives, Beijing takes away–a mantra surely encountered by many working in the country’s tech industry. Expect more fluctuations in bitcoin’s fortunes soon.