September 17, 2014

Is Bitcoin Setting Itself Up for Another Rally?

Starting about a year ago and through the rest of 2013, bitcoin was one of the most buzzed about topics on the internet. It was during this time that we saw the price of BTC surge over US$1000. Since then, bitcoin seemed to have fallen out of the public eye, and the price has fallen as well. However, while out of the spotlight, bitcoin has made significant progress towards mainstream acceptance and may be poised for another breakthrough.

One of the major barriers to bitcoin adoption is the lack of acceptance among merchants. Over the past several months, we have seen several big companies including Dell, Expedia and Newegg, start accepting the digital currency. Last week, Paypal announced a partnership with Coinbase that will allow merchants to immediately start accepting bitcoin through its subsidiary Braintree. Support from these companies is paramount in lending legitimacy to bitcoin.

The largely positive reactions from the US government have also provided bitcoin with a safer image. The government's decision to auction off the bitcoins it seized from Silk Road has been viewed as a vote of confidence in bitcoin. The Federal Reserve has recognized bitcoin's potential as a boon for global commerce. Last week, TeraExchange received approval to launch its bitcoin derivatives platform, making it the first US-regulated financial product tied to bitcoin.

While these recent developments are not particularly exciting, they are important for laying the groundwork for widespread adoption and a potentially sustainable increase in BTC price.