What’s known is bitcoin seems to see price surges around the holidays. What’s unknown? Pretty much everything else.
Remember that year that TickleMe Elmo went from the standard $28.99 to costing crazed shoppers thousands of dollars around Christmas of 1996? Or how newlines get filled with stories of people being trampled on Black Friday at Best Buy?
Luckily, the class act that is bitcoin doesn’t see these surges, right? Wrong.
Well, maybe not in those extreme ways, but some are starting to notice some interesting value trends when it comes to the holidays and bitcoin trading platforms. And not just at Christmas either. Drawing conclusions from historic bitcoin price trends is no easy task, but users at newb focused trading platforms like Bitvavo, can take a peek at former valuations and see the correlations themselves.
So what gives? Looking at prices from 2017 to 2019, bitcoin values seem to surge just after thanksgiving and die back right before Christmas. Similar surges can also be seen in the beginning days of February, surrounding the celebration of the Chinese Lunar New Year. As well as Labor Day, and the Fourth of July.
For awhile, trend researchers assumed that it was those holiday table discussions that brought bitcoin into the forefront of the family consciousness, creating a sense of FOMO, or Fear of Missing Out. However, looking retrospectively at the last three years- this doesn’t actually appear to be so.
Not only do prices surge well before those table talks could happen, but they also see a bump around holidays that aren’t generally associated with consumer-driven conventions, like gift-giving. Making it even more difficult to correlate these bull runs with dinner table discussions.
How Bitcoin is Valued
Bitcoin has a fairly simple and often straightforward way of accruing value. The principle behind how much, or how little the coin is worth is largely based on the concept of artificial scarcity. Or essentially- supply and demand.
There is a finite supply of bitcoin in the world, 21 million to be exact. No more will ever be created and the coins that do exist are released on a strict schedule. Bitcoins can only be released once they are “mined”. Every time a bitcoin transaction is created, this transaction must be decrypted, verified, and added to bitcoin’s public ledger (blocks in the blockchain).
Whenever a “miner” (any person that’s a part of the bitcoin network that decrypts and logs these transactions) logs a transaction, they are rewarded for their efforts with a predetermined amount of bitcoin. This amount halves every time 210,000 blocks are created. Which means that as bitcoin gains popularity, and more blocks are created, fewer bitcoins are released, keeping the number of coins available at any time fairly exclusive.
This also means that outside of whale investor movements, bitcoin value is next to impossible to inflate in the way that fiat currencies can be- but this also makes surges harder to predict and the marketplace extremely volatile. Despite this volatility, it’s these extreme differences to fiat that might be one reason bitcoin prices surge prior to holidays.
Bitcoin Advantage in Consumer Driven Holiday Purchases
Bitcoin is a far safer currency to use online when it comes to purchasing things, like gifts or holiday travel packages. Which is what some are proposing is actually behind these holiday-centric bull runs.
There are a few reasons that bitcoin purchases can benefit consumers when it comes to online commerce. Foremost- it’s a whole lot safer than using your bank account or credit card. As a pseudo-anonymous, push-based payment system, paying for your purchase in bitcoin means that you’re much less susceptible to fraud or identity theft.
Pull-based payment systems should arguably be the gold standard of online payments, as opposed to push-based payment systems. In a pull-based payment system, like your credit or debit card, use personally identifying information (like account numbers and names)- sending these details to the payee and then allowing the payee to contact the financial institution to ask for payment. Giving the payee access not only to your personal information but also an avenue to request a pull of funds at any time, making it the consumers job to ensure that no further payments are being made that shouldn’t be.
In push-based systems, like bitcoin, the payee (company, store, retailer) gives the customer their information (like a wallet address) and the customer then instructs their personal account to push funds into the payee’s account. Never allowing the payee direct handling of the customer’s account information.
Bitcoin is also a decentralized global currency, meaning there are no middle-men there to nickel and dime transactions, and essentially no conversion fees. Which can save consumers a ton of money when it comes to paying for transactions or purchasing foreign products or vacations.
A few solid reasons why someone might choose to make their big holiday purchases with digital currencies, instead of more conventional fiat avenues. Which could definitely explain the odd-timed price jumps that we see in bitcoin. But then again- maybe not. Which is what makes bitcoin so dang exciting in the first place.