Bitcoin Possess Infinite Fiat Potential, Says Changpeng Zhao

News / 16.12.2019

The CEO of Binance said that the price potential of the world’s largest cryptocurrency (Bitcoin) is infinite. Changpeng Zhao thinks that the finite supply of Bitcoin points to a non-constraining nominal price.

There is no predetermination of the price of Bitcoin, and no fundamentals can establish a “fair” value. The crypto keeps being in a state of price discovery, and no means to know the current phase of the price.

However, two other factors that determine the prices of Bitcoin include the size of international finance and local price discovery mechanisms. Local Bitcoin deals have determined the premium of BTC and it is specific to where hyperinflation exists and where cryptocurrencies stand as a hedge counter to the weak local currency.

The price of Bitcoin was at $7,113.39, majorly a reflection of the attitudes of market speculators. However, the prices could be exceptional when there is extensive Bitcoin adoption. The potential of allocating portfolios into Bitcoin is one of the things that point to intense appreciation.

The volatility of Bitcoin is still high, and active trading stands for price action following short-term speculation. The nominal prices of Bitcoin could be boosted following the growth of the world’s economy.

When market participants expect much higher Bitcoin prices, it means that there is remarkable “hodling” behavior, aside from trading. Bitcoin is still stored in large-scale wallets in anticipation of ultimate appreciation in the future, away from the risk of daily trading.

By the times the block reward is halved next year, market participants will feel the scarcity of Bitcoins.

Following the halving, there will be a reduction in Bitcoin reward to 900 coins for every miner, reducing selling pressure and new coins supply.

The inflation of Bitcoin is currently under 2 percent, and that is below what the majority of the central bank’s target for inflation.

Featured image courtesy of Shutterstock. Source: CryptoPress.

avatar
Dacosta Osei-Tutu, a first degree holder in Nursing, who couples his Nursing career with blockchain blogging, has a great passion for the blockchain technology and aims to play a vital role in applying this revolutionary technology to disrupt the healthcare system in Africa.