There’s no denying that bitcoin was one of the hottest trends for the most part of 2017, even allowing its altcoin peers to enjoy a bit of the spotlight as well.
Here are some of the noteworthy developments:
China’s Bitcoin Crackdown
It wasn’t all fun and games for bitcoin in the first few months of the year as concerns about market regulation in China were the stuff of headlines.
At that time, the world’s biggest bitcoin playground seemed in danger of being shut down altogether as authorities forced cryptocurrency exchanges to hike transaction costs and temporarily halt withdrawals then eventually banned ICO funding.
Japan Makes Bitcoin Legit
The tide quickly turned when the Japanese government later on recognized bitcoin as a legal form of payment. Instead of using regulation to make things difficult for traders and exchanges, Japan’s parliament passed a law that put capital requirements in place, along with cybersecurity and operational checks, that brought exchanges under anti-money laundering (AML) and know-your-customer (KYC) rules.
As a result, investors felt more confident that cybersecurity issues could be avoided and bitcoin could finally shrug off the negative association with shady dealings for which it was heavily used way back in Silk Road’s heyday.
It wasn’t long before the pickup in trading activity from Japan and other nations like South Korea made up for the dip in volumes from China’s bitcoin crackdown.
Network Upgrade and “Hard Fork” Concerns
Bitcoin Unlimited, Bitcoin Cash, Bitcoin Gold, Bitcoin Silver, Bitcoin Diamond… You name it. There have been a bunch of rival versions that threatened to steal Bitcoin Core’s thunder over the past few months.
One of the biggest reasons why these different versions have emerged was that developers have been at odds when it comes to accommodating the rising number of transactions on the blockchain.
Many feared that this would soon reach a tipping point or “hard fork” that would force bitcoin to split into separate variants that could bring forth several incompatibility issues.
Around halfway into the year, BIP 91 or Bitcoin Improvement Proposal 91, was locked in, paving the way for a network upgrade that would address scaling issues. This garnered enough consensus support from miners, elevating the original version (aka The Real Slim Shady) as the one to rule ’em all.
And rule it did! Following a couple of successful upgrades, bitcoin surged to one record high after another, increasing its value roughly five-fold since August. Keep in mind, however, that a few more hard forks are on the road all the way until March 2018.
COIN ETF, LedgerX, and Bitcoin Futures
Another major boost to bitcoin price towards the latter part of the year was the launch of bitcoin futures on a couple of exchanges. The anticipation alone for the CME launch was enough to propel the cryptocurrency past the $10,000 barrier, so you can imagine how financial junkies cheered the earlier launch by the CBOE.
The floodgates opened as institutional and retail investors were granted better access to bitcoin trading, with futures allowing two parties to exchange an asset at a specified price at an agreed upon date in the future and settlement usually made in cash.
But it also wasn’t all rainbows and butterflies for the cryptocurrency when it came to officially cracking into the financial market. Earlier in the year, the Winklevoss twins of Facebook fame struggled to get SEC approval for their COIN ETF while institutional trading and clearing platform LedgerX also hit several roadblocks in obtaining bitcoin derivatives clearing legislation.
Persistent Geopolitical Risks
If there’s one way market watchers would characterize 2017, it’s that it was choc full of geopolitical risks. Heck, we kinda had that coming with The Donald getting officially inaugurated as the leader of the free world before y’all could finish writing down your New Year’s resolutions, right?His tough talk (on Twitter!) against North Korean leader Kim Jong-Un and the hermit nation’s ICBM tests have kept traders on edge about a nuclear attack while other political shakeups in the European region supported risk-off flows.
This has typically been bullish for alternative assets like bitcoin and other cryptocurrencies, which tend to offer higher returns outside of traditional markets like stocks and commodities.
What a year, huh? Kind of surreal to recall that bitcoin was just trading around $250 five years ago! Of course it would also be prudent to keep in mind that an asset that can climb this steep could also fall just as sharply, so it won’t be hurt to stay careful and practice proper risk management as always.