Vinny Lingham, co-founder and CEO of Civic.com released a highly anticipated blog post entitled “Bitcoin 2017: A Currency Devaluation Hedge for Emerging Markets” on December 28 to share his thoughts on Bitcoin and its price trend in 2017. In his analysis, Lingham predicted that the Bitcoin price will double or triple within the next 12 months.
Over the past year, Lingham has been one of the few analysts who accurately predicted the price trend of Bitcoin. In a blog post published in April, Lingham told his readers that Bitcoin would reach a market cap of $15 bln by the end of the year. Today, it surpassed the $15 bln mark, reaching its all-time high market cap.
The reasons behind strong performance
The vast majority of mainstream media outlets and analysts have cited economic and financial factors as a reason for Bitcoin’s price rally. Various events such as the demonetization of banknotes in India and Venezuela, crackdown on Wealth Management Products (WPMs) and tightening of capital controls played a strong role in the rising price of Bitcoin. However, Lingham notes that most failed to acknowledge the impact of rising Federal Reserve rates on the value of Bitcoin.
When the Federal Reserve increases interest rates, the value of the United States dollars naturally rises. The increasing value of the dollar then leads to the devaluation of other major currencies like the Chinese yuan and Japanese yen, which ultimately strengthens the value of Bitcoin amid rising demand.
Thus, when the Federal Reserve raised its rates for the second time on December 14, Bitcoin saw a large spike in demand and price, pushing it to multi-month highs and all-time high market cap.
“Essentially, the higher the rates go, the higher the demand for Bitcoin will be. The divergence that you see is happening because Gold has been heavily favored by Gold bugs for historical reasons, in times of crises, etc, as the go-to commodity based store of value if an economic collapse happens, etc — which was often followed by a period of low-interest rates and then inflation.”
The second factor Lingham noted was the hollow supply interval between $800-$900, which immediately pushed the price of Bitcoin to over $900. At the moment, the price of Bitcoin is at $953, keeping an upward trend towards $1,000.
Lingham’s Bitcoin prediction for 2017
In all, Lingham maintains a positive outlook on the price, volatility, value and development of Bitcoin in the upcoming year. He stated:
“I do expect a 2 -3x price growth overall in 2017 for the USD/BTC pair. This may result in Bitcoin prices in other currencies being up 4 -7x, but I think it’s fair to say that USD/BTC pairing is what we should use as the benchmark.”
He believes that Bitcoin will maintain a relatively low volatility rate, proving its efficiency as a global store of value. Whilst keeping its volatility rates low, it will sustain a consistent growth rate.
Tightening regulations on Bitcoin are also expected and as Lingham explains, some countries may even to try to ban Bitcoin trading or at least restrict Bitcoin transactions. However, this will further push the demand for Bitcoin in black markets, which could act as a positive factor.
Ultimately, in consideration of current price rally and the long term trend of Bitcoin, Lingham predicts the USD/BTC pair to reach $3,000, or 3x of the current price of Bitcoin. He emphasized that other currencies may see a 4 - 7x price increase.