Is Bitcoin still a good investment in 2018?

Bitcoin SymbolThere is no denying that 2017 was the year for Bitcoin investors. The price rose at warp speed, crossing the $1000 mark in January to reach the almost $20,000 pinnacle by December of the same year.

At the beginning of the year, two factors were playing a part in the drop in the cryptocurrency value. The first, in January, came from the People’s Bank of China (PBOC). The move by the Chinese Central Bank to regulate the country’s bitcoin exchanges merely put a halt on withdrawals of fiat currency to trade in Bitcoin for a month. This attempt to prevent money laundering turned out to be a minor hiccup for Bitcoin traders; the slow down did not last long.

The second element of the mini downturn came because of US Securities and Exchange Commission (SEC) rejection of the Winklevoss (twins) application for a bitcoin exchange-traded fund. There had been an almost four-year hiatus, with bulls and bears not really paying too much attention.

The March 2017 SEC rejection announcement saw the descent of Bitcoin go as far down as the faces of the Winklevoss dream team. Nevertheless, as with the Chinese scenario, the cryptocurrency investment market was short-lived, and by the middle of 2017 pundits were forecasting strength in Bitcoin Investment value by the end of the year.

How is Bitcoin behaving in 2018?

By January 2018, the naysayers had red faces, and the Bitcoin Whales who had jumped onto the bandwagon became known as Bitcoin Millionaires. Nevertheless, that euphoria was short-lived.

Bulls vs. Bears

Buls and Bears

The stocks or currency markets DO NOT influence Bitcoin trading

 

 

So, what does affect the price?

Whether or not it is affected by the Stock Market, the similarities remain. These four distinct factors have been influencing the Bitcoin price during the past year or two:

  1. Supply and demand
  2. Limited (government) trading regulations
  3. Other internationally traded cryptocurrencies
  4. Blockchain platform providing unfettered trading and self-regulating governance

Whether it is beneficial or detrimental to your 2018 Bitcoin Investment, know that there will always be some form of market manipulation. It will help you make the right long or short-term investments and to keep your eye on the ball.

Rumors will always abound that the price of Bitcoin (and other cryptocurrencies, are manipulated by “Bitcoin Whales.” These are individuals, who own large numbers of BTC (Bitcoin Currency). It is a fact that just 1000 people/entities own about 40% of all the Bitcoin in circulation. Therefore, it comes as no real surprise, that some form of manipulation takes place, which impacts on the price movement of BTC.

Many Bitcoin Investors, known as “retail investors,” are not all millionaires. As such, they cannot manipulate or control how major league game changers play. Understanding that there is and always will be some form of risk involved and knowing that there will always be some form of illegal or unscrupulous practice that might work against you should not be a reason to worry.  Accept it as part of “market structure.”

Ignorance is NOT bliss!

Forewarned is Forearmed. Know who and what you are dealing with by studying how the stock-market manipulation affects short-term investors and day traders.  This advice should be taken to see what is happening in (fiat) foreign currency markets. The phrase “money makes money” is at play here.

There can also be long-term concentrated manipulation. This means that manipulation is not as rapid and the investors can hold against agitation of the market for longer because they have built the rise and fall of the market as a part of their long-term strategy.  These people are not afraid of “ups and downs,” because they can afford to hold on. For a big long-term investor, the waiting game often means buying up scraps when others have to sell.

Bitcoin Investment 2018

Watch the market and invest in the long term.

Supply and Demand

There are two arguments or explanations put forward that impact Bitcoin supply. The first is the blockchain protocol, which provides a “fixed rate” for the creation of new Bitcoins. This means that the miners introduce new coins by processing the transactions in blocks. For example, in 2015 the introduction rate slowed from 9.8% to 6.9% during 2016 and was at 4.3% by 2017. The demand for Bitcoins rose at a faster rate than the supply, thereby driving the price up to peak at just under $20,000 per Bitcoin by December of 2017.

The second rationale is that the system allows for a limited amount of Bitcoins. The programme has been set to cap at 21 million. This means that when the Bitcoins in circulation reach the ceiling of 21 million, mining will cease and there will be no further introduction or creation of new coins. At this point, there are 17 million Bitcoins in circulation, leaving miners a mere 4 million. This means there is 12 years supply remaining at the current rate of demand.

When 21 million Bitcoins are on the market, the price will probably depend not only on the demand, but also on their legality, and their practical worth for ready transactions. Their efficient use will depend on the popularity of other cryptocurrencies, which might be easier to obtain and use.

Bitcoin had spiked and dipped on a regular basis. From $6,000 up to $7,000 and then crossing the $8,000 level, it dropped back down to $5848.26 by the end of June.

Since then Bitcoin has been in a bullish trajectory. In the space of a month between June and July, the original cryptocurrency value increased by 33%. There was a sharp increase of 20% in one week, and this is what leads investors to believe there might be another year-end rally for Bitcoin.

Japanese Whale Hunting leads to Dump and Run

One of the reasons put forward by Bitcoin proponents there could be a bull run on the cryptocurrency, similar to that in 2017, is because the large sellers, or whales, as they are referred to in the crypto-currency ecosystem, have already dumped massive tranches of their Bitcoin holdings or stocks, which brought the price down at the beginning of 2018.

For example, in March 2018, Nobuaki Kobayashi, Tokyo-based trustee and attorney for the bankrupt giant crypto exchange platform, Mt. Gox, admitted to selling around $400 million worth of coins to pay off his client’s creditors.  The 2014 bloodbath experienced by Mt. Gox when they were hacked to the tune of 850,000 bitcoins (worth about $500 million). After the company disappeared from the scene, it left the crypto-currency world open for business; Mt Gox had been handling around 70% to 80% of all transactions e the hacking fiasco.

Bitcoin Crypto-currency Market Domination

Bitcoin continues to dominate the cryptocurrency market share.  Recent figures show that Bitcoin is at its highest level for 2018, and is nudging the same level where it was last year before bounding up to its highest level in history.

Bitcoin is currently also leading the way, holding first place in cryptocurrency market capitalization at 55% of world market share, and is way ahead of their nearest rival. (Ref: coinmarketcap.com)

The News

Whether fake or otherwise, most of 2018, BTC bore the brunt of most of the bad rap given in world news forums. However, it appears the bad news and criticism poured on the cryptocurrency ecosystem, by government officials and leading economists about the flaws and scandals, which engulfed the Fintech industry in general just got more people interested.

It looks very likely that Bitcoin Exchange-Traded Funds (ETFs) will gain SEC approval quick soon. This means that retail investors will be able to make use of BTC as Assets, leading to a flood of capital from corporate and institutional investors.

Even with the diversification of trade split among other crypto-currencies and Bitcoin’s value of almost $7,000 in September 2018 is quite a way off the all-time high of $19,783.21 reached in December 2017. However, investors continue to show a positive approach to BTC for long-term investment. This means that the perception by prominent leaders in the economy and investors are positive about cryptocurrencies as an asset and could push Bitcoin through to a new high.

Is there a case for Bitcoin Bears?

There will always be someone looking at the other side of the coin. The lowest troughs, followed by large upswings for most of 2018 showed that in three months out of seven, the lows set new bottom percentage levels.

Takeaway

At the end of the day, the message is simple: to be taken seriously in the future,

Bitcoin must continue to make it illegal and more difficult for players to manipulate the markets.

The blockchain protocol: decentralization that replaces regulation has shown that there is some way to go before the method is free and clear contamination. With mainstream investment finance and countries taking a role in legalizing Bitcoin Cryptocurrency as a form of payment and asset investment, it is now, probably as much as before, important for Bitcoin to strenuously defend the BTC from manipulation and theft.