He earned a degree in electronics engineering and several patents, with the most remarkable being the world’s thinnest scales, the world’s thinnest phone charger, and the world’s first massage and relaxation robot. These were best sellers on some chain stores, online retailer Amazon and U.S. shopping channel QVC, respectively.
Over the past two decades, he has successfully introduced five inventions, including successfully selling his Gigabit Ethernet camera technology to a Japanese multinational corporation.
But perhaps Eyal’s biggest achievement is in the crypto space. He first discovered Bitcoin in 2016 and was blown over by the solutions it offered in terms of independence, flexibility, and technological opportunities. He discovered that Bitcoin – and its mining – merged all of his lifelong passions: technology, entrepreneurship, and finance.
Eyal Avramovich is the founder of MineBest, an award-winning cryptocurrency mining business that he started in 2017, and co-creator of cryptocurrencies Bitcoin Vault (BTCV) and Electric Cash (ELCASH).
MineBest is a group of cooperating companies and local business partners that helps businesses get into the mining industry without the technical know-how involved. By democratizing the space, Eyal found that more people could enjoy the long-term benefits of crypto mining.
MineBest runs multiple mining farms around the world and is continually exploring new locations. They provide state-of-the-art facilities and infrastructure that are maintained by experts around the clock.
In addition to his work with MineBest, Eyal has co-created two cryptocurrencies, Bitcoin Vault (BTCV) and Electric Cash (ELCASH). Both coins have been praised for their cutting-edge security features.
Electric Cash is a Proof of Work SHA-256-based cryptocurrency. It provides fast and very cheap transactions and rewards all staking users while allowing them to Govern the future of the project through voting.
Meanwhile, Bitcoin Vault is the world’s first cryptocurrency that allows users to cancel transactions after they are posted to the blockchain. This revolutionary approach is possible with a customized blockchain protocol that confirms payments within 144 blocks (or around 24 hours). This feature protects users from losing their funds in case of common key thefts, user mistakes or errors, and bugs.
After starting 2022 at $47,299.69, the price of Bitcoin recently dropped to around $20,000 as we approach the end of the third quarter. All of this shows how volatile cryptocurrency can be.
There are many factors that affect the price of Bitcoin. These include media hype, adoption by a broader audience, political uncertainty and risk, moves by governments and regulators, and the internal governance of Bitcoin itself.
We recently had the opportunity to connect with Eyal Avramovich and hear his perspective on the factors driving the price of Bitcoin and a glimpse into the future of cryptocurrency by one of the leading entrepreneurs in the industry.
1) Media Hype
Economists have long observed that psychological factors can strongly affect investor decisions. Investors often make decisions based on the behavior of other market participants and their own intuitions rather than technical analysis. Fear of Missing Out (FOMO) is a powerful motivator when prices are rising, and Loss Aversion plays a strong role when prices are declining — economists have observed we tend to act more irrationally when trying to avoid investment losses than we do to pursue investment gains.
Analysis of the price of Bitcoin shows that positive media coverage is one of the main factors driving the price.
Positive media coverage of new technologies causes a well-known hype cycle – a peak of hype is followed by a “trough of disillusionment.”
This was most apparent in the early days of Bitcoin when the mainstream press started to report on the new currency, which caused a number of short price spikes and collapses. As media coverage increases and other factors are brought in, the effect of the media alone tends to be balanced by other factors.
In the stock market, we see a similar phenomenon during an initial public offering (IPO), as investors “jump in” en masse, and the value rapidly increases from its opening price.
2) Political risk
Political risk around fiat currencies can also affect the price of Bitcoin as people use digital currencies to hedge against price movements in a particular currency or they need to quickly move large amounts of value out of a country or currency.
The economic crisis in Greece in 2015 was followed by reports of increased buying of Bitcoin by Greek citizens wishing to protect their wealth.
But nervousness about the national referendum for Britain to leave the European Union (Brexit) led to an increase in the price of Bitcoin alongside a decrease in the value of the British pound.
In the first 18 months since COVID-19 was declared a pandemic, the price of Bitcoin rose by about 525 percent.
After Biden’s election, economic uncertainty caused another spike in Bitcoin prices.
3) Regulatory Actions
Global regulators are struggling to respond to the rise of Bitcoin. Some jurisdictions have decided to ban the cryptocurrency completely, like China, while others, like El Salvador, have warmly embraced digital currency. Expanding adoption of cryptocurrency will force regulators to soon decide, for instance, how it will be treated by the tax system or whether and what regulation applies to its use.
These decisions will have a dramatic impact on the price of Bitcoin. When China decided to shut down several Bitcoin exchanges and ban initial coin offerings (a form of crowdfunding often paid for with cryptocurrencies), the decision sent the price of Bitcoin plummeting by 29% in 24 hours.
4) Bitcoin’s governance
Although Bitcoin is a decentralized currency, some decisions about how it will work or evolve needs to be made from time to time. These also have an impact on the price.
The software used to verify Bitcoin transactions is created by developers and is run by miners.
To change the software used to mine and authenticate transactions, developers need more than 50% of the global network of miners to agree with a proposed change. When they get that support, they can create a “fork.”
In August 2017, Bitcoin underwent a “hard fork.” A new cryptocurrency – Bitcoin Cash – was created, and everyone who owned Bitcoin was given this new cryptocurrency. Bitcoin Cash software can process 30 transactions per second, four times more than Bitcoin.
Although the price rose rapidly afterward, a fork creates uncertainty, and uncertainty can cause price volatility.
These four factors have all had a significant impact on the price of Bitcoin over its short life. It is a volatile and experimental technology and is still in development.
Over the longer term, Bitcoin is likely to gain acceptance among investors for many reasons. For example, Bitcoin is deflationary – because there is a limited supply both in the total number of Bitcoins that can ever be created as well as the rate they can be created, and the purchasing power of Bitcoin is expected to increase over time.
This differs significantly from fiat currencies like the United States dollar. Inflation will, over time, significantly reduce the value of a dollar.
For investors, the volatility of Bitcoin can make for an opportunistic trading environment (e.g. lots of price movements give opportunities to make money buying or selling).
Bitcoin can also be a long-term investment due to it being unregulated in supply and having some benefits over some national currencies: it is global, untied to supply of currencies by central banks, easily transferable across borders, and doesn’t incur considerable transaction and administration costs paid to banks, currency markets and financial traders.