Forbes reports that their interactive Bitcoin Price Estimator has been readjusted to reflect present realities in the price of Bitcoin. According to earlier report, BTC was to end the year at $15,000, however, a review of the forecast says that the coin will now likely end 2018 at $12,500. The new figure is a reflection of the fall in transaction volumes over the past few months.
Bitcoin price plummeted in May to a low $7,100 from nearly $10,000 at the beginning of the month. Although it has recovered some of the losses, the coin is still struggling at an average of $7,500 at the beginning of June 2018. A remarkable reduction in the volume of transactions has kept investors wary despite reports that traditional financial institutions are gradually moving funds into the coin market.
The news that Goldman Sach, the investment bank was establishing a cryptocurrency trading desk was instrumental in seeing spikes in Bitcoin price in April in what seemed like a recovery of losses incurred by the coin, however, even the trend was not sustained as prices dipped again in mid May.
IntercontenentalExchange, the owners of NYSE also announced that work was in progress on a new trading platform that would allow institutional investors to purchase and hold cryptocurrencies. Increasing adoption has not been matched with sustained bullishness in the market as expected, especially when compared with the same happenstance in Q3 and Q4 of 2017.
One of the reasons for this is the continual dumping of the Mt Gox coins which the trustee reportedly moved again. Mt Gox, the Japanese exchange which was hacked in 2014 has some 200,000 bitcoins which the trustee routinely disposes of in exchanges with the resultant effect of pushing down the price of Bitcoin and consequently, other altcoins.
This is why most investors have been cautious and explains why trading volume of the coin has dwindled in recent months. There has been a sharp drop in the volume of BTC transactions in the exchanges from $914 million in March to $429 million in May 2018. The volume will likely increase but the growth rate will be slow.
Bitcoin price is determined by the market demand and supply. Interestingly, 80 percent of bitcoins have been mined in a generating system that was coded to be increasingly difficult with time. This means that theoretically, the volume of bitcoins in circulation is controlled by the limitation placed on mining making it a possibility that future value of the coin will be much higher than what it presently is. This is the logic behind investors hold Bitcoin at the wallets and the reason why core enthusiasts view the coin as long term assets.
Since December when BTC price peaked at nearly $20,000 with transaction volume peaking in mid January, there has been a downward trend usually referred to as corrections in which investors with no intention of holding unto the coin has generally sold off and contribute to its descent.