The price of bitcoin, which is well-known for its high volatility, might exceed its maximum reached in 2013 and more than double next year, due to the halving of bitcoin reward, thinks Daniel Masters, director of Global Advisors Bitcoin Investment.

In accordance with the original bitcoin protocol, miner’s reward is halved every four years. Today the sum equals 25 bitcoins, and the next halving is due in July 2016, when the reward will drop to 12.5 bitcoins. Following the law of supply and demand, the decrease of supply will make the price grow and, as a result, we can expect a dramatic boost of the bitcoin exchange rate – up to $4400 by the end of 2017, says Masters to Reuters.

The expected halving of bitcoin reward is not the only reason of the alleged price jump. Masters also names the growing interest to bitcoin on behalf of international companies, and increased awareness of people. Some of the world’s most influential bitcoin exchanges are based in China, the Chinese being an important part of the world’s bitcoin economy, and we can consider the weakening of the Yuan as one of possible reasons for the future bitcoin rise. 

But all the above-mentioned factors can not cause a steady growth. 2015 has witnessed several dramatic ups and downs of bitcoin exchange rate, and the price remained highly volatile despite the growing interest towards the cryptocurrency and constantly emerging bitcoin and blockchain start-ups, which CoinFox has written about. It is the change of the reward that remains the main reason for the expected growth.

The first time the reward was halved in November 2012. That time it did not affect the price much, because in those days bitcoin was a local phenomenon. The price reached the maximum of $1147 on 4 December 2013. The general vector was downward the following year, partly due to the collapse of Tokyo-based Mt. Gox exchange in February 2014. Nevertheless, the way down was not smooth, and the price jumped up many times. Most of 2015 the exchange rate balanced between $200 and $300, but in October it began to grow again and has reached the year’s maximum of $465 on 15 December.

Andrew Levich