The Bitcoin Bubble? – Should I Buy Or Not?
Previous to last week, the almost universal opinion on investing in Bitcoin was that the massive rises were done and dusted. After all, this was a currency that had risen from a value of $0.07 as of 2010, to $181.66 in 2013, to $1,201.86 in 2017. But all of this paled into insignificance as of August 14th, when Bitcoin soared above the staggering mark of $4,300 (accounting for an increase of more than 28% in just a single week).
Was it a fluke? An unexpected market spike? A temporary high?
Not that it seems, actually – Bitcoin has continued to steadily climb since that time, now holding a value of $4468 (£3468). All of which has resulted in an increase in Bitcoins market capitalization by more than $15 billion.
These figures mean that someone who invested just $1 back when Bitcoin emerged seven years ago would today be the happy owner of $1.4 million. Great news for them – but what about the remainder of the market? Is the time for investing in Bitcoin now?
Image Credit: CoinDesk
Expert Opinion: What’s Driving this Unprecedented Growth?
“At Wirex, we have seen a surge of interest from South Korean customers as they seek bitcoin as a safe haven asset as they anticipate the ‘Trump effect’ to damage their economy”
- Pavel Matveev, CEO of cryptocurrency personal finance app Wirex
CNBC report that there are four core drivers of Bitcoin’s most recent performance: demand from Japanese investors, a long-awaited Bitcoin upgrade, a rise in institutional interest and a general consensus that Bitcoin is a safe haven in times of political. Let’s take a look at each in detail…
Demand from Japanese investors
The foremost driving force behind Bitcoin right now is undoubtedly Japanese investment – so significant is it, that it accounts for 42% of all Bitcoin buying. And it is worth noting that Japanese regulators have always viewed Bitcoin more favourably than regulators in the west, while a swathe of Japanese retailers also support the introduction of Bitcoin into the mainstream.
The long-awaited Bitcoin upgrade
A tech overhaul for Bitcoin is finally here – something that will increase transaction size capability in the Blockchain. Known as Segwit2X, Charlie Hayter, CEO of CryptoCompare notes that “Segwit2X has undoubtedly been the initial catalyst for this rally removing the uncertainty of how Bitcoin is meant to scale”.
A rise in institutional interest
Financial institutions, insurers and tech giants are already making use of it (including Barclays, IBM and NASDAQ) and regulatory bodies are beginning to look closer at Bitcoin, as other large businesses edge ever nearer to getting in on the action.
A safe haven investment/The Trump effect
President Trump has been somewhat of an enigma when it comes to his impact on the financial markets. Following his inauguration the markets welcomed the new president into the White House, and yet since then the most controversial world leader yet has bought about wild falls followed by steady performance.
Now, with Trump threatening nuclear war, destabilising a chance of redressing global warming and being accused of not criticising the neo Nazis of a supremacist march, safe haven investments are faring better and better – with Bitcoin being amongst them.
The Key Question: Where Next for Bitcoin and the Wider Crypto Market?
So, where next for the almighty Bitcoin? It seems that expert opinion is truly divided. Let’s explore four drastically differing opinions from some of the industries loudest and clearest voices…
$15,000 per Bitcoin will be seen before the year is out – Masterluc
Investor Masterluc has been notoriously accurate when predicting the next move for Bitcoin. Now? He’s predicting that Bitcoin will hit $15,000 before 2017 is out, and carry on increasing in value all the way up to 2019. From anyone else it would be outrageous – but from Masterluc? Well, he does have form for predictions that are on-point.
‘The future is bright’ – Max Keiser of RT’s Keiser Report
“Bitcoins have real value. They can’t be counterfeited, and there is a limited supply. The fact they’re perfect for moving value around the internet means they compete with other currencies. And as more people switch from banks and fiat money to bitcoin the price will rise, and crucially, banks will fail”
Play it Safe – Invest in The Tangible – Adam Hartung
“Unless you are a professional trader, or you simply want to gamble, stay away from Bitcoins. They have no inherent value, because they are a currency which represents value rather than having value themselves. Bitcoin values are purely dependent upon holders having faith they will continue to have value”.
As for our opinion? Well we’d align with the experts over at Goldman Sachs, namely the theory of technical analyst Sheba Jafari…
Jafari says that Bitcoin is currently at the height of a ‘fifth wave’ of ‘impulsive’ buying. He goes on to argue that once this well-known sequence draws to a close, the currency will enter a corrective phase, so Bitcoin investors should expect falls – BIG falls.
Whilst we’d be anxious to agree that this will equate to a 50% fall in value, we could potentially foresee his prediction of a drop by 38.2%. Before this time, so the theory goes, there may still be rises to be seen.
“Once a full five-wave sequence is in place, the market should in theory enter a corrective phase,” she said. “This can last at least one-third of the time it took to complete the preceding advance and retrace at least 38.2 percent of the entire move“
Image credit: Goldman Sachs
Alt Coins – Strengths to Take Note Of
Alt Coins have long since been considered the place to be if big rises are to be seen, and indeed recent pushes in market value of the entire cryptocurrency landscape have been put down to Alt Coins. As of July, market capitalization reached $72,830,700,000, before falling again to $30.79 million.
Image credit: Coin Telegraph
Today we have seen recovery, with Ethereum, Ripple, Dash, Litecoin and NEM serving as the most popular Alt Coins for the time being.
Image credit: Coin Telegraph
Whatever the future of Bitcoin, it’s true to say that Alt Coins are more accessible, with far lower buy in points. What’s more rises for Alt Coins almost level with Bitcoin are not unheard of, and as of mid-June 2017 Ethereum came close to equaling Bitcoin’s market share – at 39.5% and 33.4% respectively.
Alt Coins are also largely free from what could be considered a Japanese gold rush – which is arguably fanning the flames of a Bitcoin bubble.
Yet whatever the future, one thing’s for certain – these are exciting, never-before-seen times for the world of cryptocurrency.
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