Bitcoin Prices Becoming More Stable, ConvergEx SaysOlga Kharif
Bitcoin’s price may be stabilizing as the virtual currency becomes more widely used and adoption by merchants accelerates, brokerage ConvergEx Group LLC said.
The digital money, which rose to $1,000 last year from about $13 at the beginning of 2013, is on the road to stability now, according to Nicholas Colas, chief market strategist at ConvergEx in New York. Bitcoin’s price rose 6.2 percent in the last month to $794 on Bitstamp, one of the more active online exchanges where Bitcoins are traded for dollars and other currencies.
More merchants are starting to accept Bitcoins, which can be used to buy everything from gummy bears to cars. Electronics-retailer TigerDirect Inc. said yesterday that consumers will be able to use Bitcoin to buy more than 200,000 products on the site. Online-retailer Overstock.com Inc. and social-games developer Zynga Inc. now accept Bitcoins as well. Lower volatility is critical if Bitcoin is to be used widely in online and offline retail transactions, Colas said.
“We have no doubt that merchants will adopt Bitcoin simply to access newly minted high net worth individuals,” Colas said in the note. “But to keep them in the fold and increase the usage of Bitcoin in other parts of their business, they will need to see some greater stability in the price.”
Bitcoins exist as software, which contains the rules governing their supply and can only be created by solving complex problems embedded in the currency, keeping total growth limited. After speculators rushed in and drove prices higher, Bitcoins attracted the scrutiny of regulators in China and India, adding to volatile swings in the virtual currency’s value against the dollar and other currencies.
“The wider acceptance of Bitcoin from retailers certainly could drive up the price of Bitcoin, but it’s also fair to note that there’s still a great amount of speculators trading in Bitcoin -- so there may be quite a bit of volatility in the future,” Ugo Egbunike, director of business development at IndexUniverse, wrote in an e-mail.