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Crazy Bitcoin Predictions For 2017

|Includes: The Bank of New York Mellon Corporation (BK), DB, JPM, PYPL, UBS, WMT

Bitcoin has been attracting a lot of attention lately because its price nearly doubled in a little over a year. A bitcoin cost $442.50 on December 20, 2015, and $891.75 on December 24, 2016.

This means there might be no limits for bitcoin in 2017, so next year might be when the cryptocurrency totally disrupts the global economy. Therefore we might expect some great things from bitcoin.

Insane Bitcoin Predictions for 2017

1. The price of bitcoin might exceed the price of an ounce of gold for the first time. This prediction is not as crazy as you might think. On December 24, 2016, an ounce of gold was trading at $1,136.90 and a bitcoin was trading for $891.75. That means the price difference between bitcoin and gold was just $245.14. Now consider the fact that bitcoin doubled in value over the course of 2016, it was trading at $442.50 on December 20, 2015 and $891.75 on Christmas Eve 2016. Gold prices also increased from $1.083.50 on December 21, 2016, to $1,137.30 on December 24, 2016. If gold and bitcoin repeat their performance next year, bitcoin will be more valuable than gold.

2. Banks will start issuing their own cryptocurrencies and start using currencies like bitcoin and Ethereum. UBS Group (NYSE: UBS), Banco Santander (NYSE: SAN) and Bank of New York Mellon (NYSE: BK) want to issue a cryptocurrency called USC. Citi Group (NYSE: C) and Goldman Sachs (NYSE: GS) have revealed cryptocurrency plans. America's largest bank JPMorgan Chase (NYSE: JPM) is working on a derivatives and payments called Quorum that will operate on Ethereum, Forbes reported.

3. A major online retailer like Walmart (NYSE: WMT), Alibaba (NYSE: BABA) or Amazon (NASDAQ: AMZN) will start accepting Ethereum or bitcoin payment. Since Walmart and Amazon already accept gift cards purchased with bitcoin this not as big a stretch as you think. Walmart.com already accepts PayPal (NASDAQ: PYPL), and similar solutions from Visa and MasterCard, so adding bitcoin would be matter of simple engineering. One reason why they will do this is to conduct more business in nations with unstable currencies like Venezuela. One strong possibility is that one of those giants will simply integrate cryptocurrency into its existing payment app. Walmart Pay is already integrated with Chase Pay and it can be used in every Walmart store in the United States.

4. At least one major government will try to ban bitcoin and fail. This has already sort of happened in China, where the government is trying to enforce rigid currency controls. Expect similar efforts elsewhere; particularly in Europe and India, where governments are stepping up tax collection efforts.

5. Bitcoin prices could increase by 165% because of inflation. Steen Jakobsen; the Chief Investment Officer and Chief Economist at Denmark's Saxo Bank thinks President-Elect Trump's polices would trigger high inflation. Jakobsen believes that would drive bitcoin prices through the roof. If Jakobsen's forecast is correct a bitcoin would cost $1,471.39.

So 2017 seems to be shaping up as a pivotal year for bitcoin. One has to wonder how other cryptocurrencies like Etherum will fair in this environment.

Disclosure: I am/we are long PYPL.