Nothing gets Bitcoin enthusiasts more excited than when the price of a bitcoin rises. Which makes sense, as most Bitcoin enthusiasts are holders of bitcoins, and thus it is to their financial benefit when the price rises. Rising prices also stokes interest in the mainstream media, as they love to push any story of a soaring stock or commodity or currency (probably because they are hoping to cover its crash later). Currently, the price of a bitcoin is knocking on $300, up from about $240 just a few weeks ago.
But I don’t really care about the value of one bitcoin, and it doesn’t really matter for the long-term success of the digital monetary system. Actually, a more stable price (as we’ve had for the past few months) is in many ways better, as it allows Bitcoin to be used more as a currency rather than an investment. Of course, those who support Bitcoin expect the value of one bitcoin compared to the dollar to rise over time, as Bitcoin has a more restrictive money supply, and, frankly, the Fed’s orgy of “quantitative easing” means the value of just about everything compared to the dollar is rising. But rapid spikes are not really good for Bitcoin as currency, as they are not conducive to using it in daily life to buy and sell goods and services.
That being said, I do think that Bitcoin faces a psychological hurdle: the $1,200 barrier. At one time, the price of one bitcoin was around $1,200 (which was due most likely to manipulation of the market), and now every time an article is written about Bitcoin, somewhere it is mentioned that the value of one bitcoin today is much lower than that (artificial) high. As long as the price stays well below $1,200, people will be hesitant to convert their dollars to bitcoins, as they see it as “undervalued” (and contrary to common sense, most people want to get in when something is “high” and want to get out while it is “low”).
Ultimately, I hope the price of one bitcoin steadily – and slowly – rises. This would be good for its usage as a currency, and also good psychologically for the average person to see Bitcoin as something that won’t erode their purchasing power over time (as opposed to the dollar).
