The price of Bitcoin is currently US$7,963 after reaching the US$8,000 mark and has risen 729% this year. Since the 30% correction a few weeks ago the price has stormed back past the previous peak.
But can it go further?
Below are three reasons why it could:
When there is a significant price rise of any asset, it tends to go on longer than people predict as there is the fear of missing out (FOMO) and late adopters, which drives the price higher, even though it may already be at lofty levels.
Despite this popularity and surge in price there are still a lot of people that are either not aware of how it works or are sceptical.
Once people start seeing Bitcoin ATMs on the street and more people start to see it as a legitimate currency more people will buy. At present Digitalx Ltd (ASX: DCC) is the only bitcoin company that is listed on the ASX and I am sure there will be more in the future.
The forking issue gets resolved
At present Bitcoin developers and stakeholders are divided into two camps.
One camp wants to keep the blocks that make up the Bitcoin network limited in their size to protect them from hacks and the other camp wants to make the blocks bigger to improve the network speed.
This means a ‘fork’ could occur, which is splitting the chain into two parts. While the uncertainty is not good for price momentum, if it does get resolved the Bitcoin price could push higher.
Introduction of Bitcoin futures
News that the CME Group Inc(NASDAQ: CME), which is probably the most well-known commodity derivatives exchange, plans to add Bitcoin futures trading in December is lending the cryptocurrency more credibility and means it is a step closer to the currency being an acceptable asset class.
Some analysts have said the Bitcoin price could be $20,000 by 2020.
This will mean that now institutions and hedge funds can hedge their holdings against holding the actual asset and this will increase volumes pushing the price higher.
Motley Fool contributor Christopher Coe does not own shares in any of the companies mentioned above. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.