Where will Bitcoin head in 2015? It’s December and that means it’s prediction time, and so far with pre-Christmas predictions there’s a split of opinion between those predicting a bull or bear market for the cryptocurrency.

Bulls

At the head of the bullish Bitcoin market predictions for 2015 is Keith Gilabert of Fina V Capital, who makes the interesting prediction that “Bitcoin could rise significantly [in 2015] as currencies around the world and oil prices continue to weaken. Bitcoin is the new alternative to gold.”

“The biggest advantage Bitcoin has is the largest exchanges are backed by the U.S. dollar and you can trade in Bitcoin for with very little fees. We have seen the dollar surge against the Rupee and the Ruble as investors flee for safety” according to Gilabert.

“Bitcoin continues to develop and currently it is still a volatile trading instrument with risk, but I do expect the volatility to decline as more consumers and businesses accept the currency. Bitcoin offers a standard protocol for currency and stored value, the blockchain platform makes Bitcoin safer than a credit card or even a bank.”

Robbie Davidson at Techpurge predicts that Bitcoin will be huge in 2015, arguing that following a surge in venture capital into the sector in 2014, along with major companies now accepting the cryptocurrency. He noted that promotion of Bitcoin will increase in the forthcoming year, and suggests that the Bitcoin exchange-traded fund The Winklevoss Bitcoin Trust could be a game changer.

The Wall Street Journal’s Michael J. Casey paints a positive future for Bitcoin in 2015, saying that critics that say the drop in the value of Bitcoin is evidence that it has failed are wrong and should be ignored.

“Bitcoin’s price is irrelevant to the key question of whether the underlying technology will disrupt finance. There are many signs it will” Casey argues, noting that “Bitcoin is much more than just a currency. Investors from Silicon Valley to Wall Street are now pouring money and expertise into [the space,] software developers anywhere can use Bitcoin’s open-source code to create specialized applications that let businesses undertake commercial exchanges… that threaten to make redundant many services provided by banks, foreign-exchange houses, escrow agents, clearing houses, notaries public and even lawyers.”

“…it doesn’t matter that mom and pop aren’t comfortable with bitcoin. What matters is whether the exploding software innovation around cryptocurrency leads to solutions that allow corporations and governments to derive benefits while protecting themselves from risks, including the volatility.”

Bears

Leading the bears is David Glance at The Conversation, who cites the precipitous fall in the valuation of Bitcoin in 2014 as biding of bad omens for the coming year.

“Any good news Bitcoin had this year however was well and truly drowned out by the bad” Glance claims, “The failure of the largest Bitcoin exchange, Mt Gox in February demonstrated beyond a shadow of any doubt that the appearances of professional and safe service in the Bitcoin world were illusory.”

He then (bizarrely) uses problems with the adaption of Apple Pay, Google Wallet and Amazon Coin as providing a valid argument as to why Bitcoin is unlikely to perform any better in 2015.

Henry Farrell at The Washington Post argues in a story titled “Bitcoin’s financial network is doomed” that any suggestion of Bitcoin succeeding as a financial network will be crippled by Government.

“Up to this point, regulators have largely tolerated Bitcoin as a curiosity and experiment” Farrell writes.  “While Bitcoin allows consumers to buy illegal drugs on Tor Hidden Services sites like Agora and Evolution, they don’t do so on a sufficiently large scale to really cause enormous alarm.

“Regulators still don’t know quite what to do with Bitcoin. But if Bitcoin were ever to threaten to become a truly decentralized payments network, owned by no one…regulators would know very well what to do with it. They’d introduce regulatory guidances and pass laws to freeze it off from the regular financial system.”

He does say that Bitcoin could still survive at the margins, but would be isolated, and in no position to threaten Visa or Mastercard, or the underlying payment and messaging services that underpin the world financial system as it stands today.

What they agree on

There are a few things the bulls and bears both agree on for Bitcoin in 2015.

On volatility, Managing Director of KapronAsia Zennon Kapron sums up what many predict for the year ahead, saying that “although the swings in absolute value seem to be lower in 2014 than they were at the end of 2013, the volatility will likely remain for the next few years.”

Acceptance of Bitcoin in the mainstream may be the key: “There is a tremendous amount of private equity and venture capital money being put into Bitcoin to create new and compelling business models, but the only thing that will temper volatility is increased acceptance and usage,” he said.

CEO and Co-Founder of BTC China agrees: “Volatility will be inherent for this new asset class. The reason is simple: It has a small circulation value now, but theoretically, with wide adoption, the circulation value should be 100x or 1,000x what it is today,” he said. “The price would have to appreciate dramatically, and that would involve very high volatility for years to come.”

As we’ve reported throughout the year more and more firms are accepting payment in Bitcoin, including most recently Microsoft. With the amount of venture capital flowing into the space it’s highly unlikely Bitcoin will be a bust in the year ahead, but for investors in the sector to see returns going forward, mainstream consumer acceptance is definitely the key to a long and prosperous future.

photo credits: Bhupal Adhikari, HeatherBradleyPhotography via photopin cc