Bitcoin reached its all time high in November of 2013, briefly nearing $1,200 USD each. From that high, Bitcoin dropped in price to reach a bottom of about $200 each in early 2015, and again in the Fall of 2015. Since the double-bottom of last year, Bitcoin has surged in price to over $400, nearly a 100% gain in 6 months time.
Many people are now beginning to question whether the 2-year price drop is finally over.
In our opinion, it is.
It’s no secret that the vast majority of Bitcoin buying and selling takes place in China. It’s also no secret that China is experiencing severe difficulties in their financial markets. China’s stock market has recently crashed, and their banking system is under severe stress. As the Chinese leaders take steps to prevent a financial implosion – and thus limit their citizens ability to protect themselves from a financial crisis – assets that are outside the system will become more and more sought after.
For many, many centuries gold has filled the role as ultimate safe haven during times of financial crisis. The average Chinese citizen is well aware of the benefits of gold. There’s only one problem with gold: it tends to show up very well in x-ray machines, meaning it is difficult to take a substantial amount of money out of the country if that money is in the form of gold.
As China’s crisis escalates, and its leaders become more determined to keep the citizens trapped in a failing system, it’s only a matter of time before ever more strict currency controls are enacted. When that occurs, Bitcoin will benefit in the same way that gold traditionally has. Billions upon billions of dollars will be seeking to exit sinking financial positions, and some of that flow of money will make its way into Bitcoin. Obviously, the price of Bitcoin will soar.
It will be virtually impossible to leave China with a million dollars worth of cash or gold, but it will be exceptionally easy to leave China with a million dollars in Bitcoin.
It’s no coincidence that China’s stock market crashed last summer, and that is when Bitcoin begin to move higher. As China’s financial markets come under more stress, Bitcoin will continue to rise.
We believe the evidence is clear that the Bitcoin price drop is over.