Between Bitcoin Bulls and Bears an Academic Weighs In

When Bitcoin is down, the Bearish come out and berate the bubble-linked digital currency. Then, when things turn around, the Bulls stampede out the gates and proffer their emotional reasoning of how this is the money revolution.

All in all, it can be quite hard to find a learned and practical opinion, but Daniele Bianchi, an assistant professor of Finance of Warwick Business School, has given his thoughts on the recent rally and why it has happened.

A lot of thought and introspection was given when Bitcoin crossed the $10,000 mark. Questions were asked as to how and why Bitcoin reached this mark, and how it did it so quickly. The digital currency even raced on past $11,000. Now it looks to be correcting itself.

How did we get here?

Despite the correction back below $10,000, it is important to understand how Bitcoin got to such a milestone in the first place. In of the key reasons is of course, like in any booming market, demand.

“Despite fears about the Bitcoin ‘bubble’ bursting, the price of the new digital coins is going through the roof. Indeed, the increasing demand pressure from investors and speculators makes the case for an even further increase in Bitcoin prices in the near future,” Bianchi explained, adding:

“As the supply of Bitcoins is kept fixed by the underlying protocol, price increases are essentially due to increasing demand.” […]

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