Everyone who is knee deep in the cryptocurrency business knows that cryptocurrencies are one of the most volatile of all things ever created. Today, it could look like the hope of the future, tomorrow it could look like the end of the world doomsday everyone has always dreaded. Recently, bitcoin – the mother of all digital coins – had her own fair share of the price swing. Bitcoin swung from $20,000 to as low as about $12,000 in the month of December alone. Some analysts have given reasons as to why this happened, and what it could mean for the future of cryptocurrencies, as well as a heads up for people who plan on investing in cryptocurrencies in the coming year.
Since bitcoin stepped into the picture, other cryptos have also erupted in an effort to capitalise on the weaknesses of bitcoin and to perfect them so as to draw even more people. Some these altcoins have succeeded and others have failed. Those that succeeded seem to be draining the life force from bitcoin eventually. However, all major digital currencies faced a price fall on Friday December 22. One analyst stated that
“A lot of the capital is flowing from bitcoin into alt-coins. Companies like Verge and Ripple, have seen cryptocurrency values go up over 400 per cent in the last week,”
There have been several security breaches in the cryptocurrency area and this has got many investors very worried as to whether their investments will not be all washed away like footprints at the seashore. Cryptocurrencies as everyone knows, are not managed by a central body worldwide; they are circulated by various cryptocurrency exchange bodies. Thus, should any of these exchange bodies suffer a security breach all people with digital currency accounts with that exchange firm struggle with huge losses.
One of such an instance was when a huge cyber-attack was launched against a South Korean digital currency exchange firm stealing approximately 17% of all assets belonging to the firm. This event not only affected the South Korean firm but also caused a large number of people to sell their bitcoins and other digital coins they owned particularly in the Asian market. Despite the fact that North Korea is being investigated for the crime, everything lost is gone and the people who lost their investments now have to bear the cost.
Even though Bitcoin is gradually making progress towards becoming a mainstream investment asset (because of the CBOE and CME bitcoin future announcements), these security breaches are definitely a problem and hindrance to the growth of the cryptocurrency and attraction of more investors to it.
Fear and Panic
Most people could just be pulling away from cryptocurrencies at the end of year in an effort to avoid “very” risky investments. Others too may have just sold off their coins in panic and fear of bitcoin totally losing its value after such a rapid end of year of growth. Most people are withdrawing from bitcoin at the end of year in an attempt to see how well it would perform at the beginning of the new year before they come back to it. This way, they get to play safe with their investments. One CEO stated that
“This increase in availability could have initially driven prices down, with other holders – especially those that bought at the top of the market – panicked into offloading as a result,”
Volatile, But Why
Bitcoin isn’t regulated by any central bank, and its value is gained from just how much confidence people have in its market and value tomorrow. Unlike fiat currencies that have the backing of the central bank to make sure it is stable, bitcoin has no such bank or regulator behind it. Thus, as the people’s confidence in it increases, its price goes up and vice versa.
What Is Ahead For 2018
So far as everyone else is concerned bitcoin is still a gamble – and to some, a very big one. Bitcoin could crash anywhere in the next year or even beyond, even though its highly speculative. Thus, what anyone who wants to invest in bitcoin should know is that he or she could lose everything he put in or gain more than even expected – it’s a choice best left to the investor to make. What most analysts advise is to not invest into bitcoin on a short-term scale but rather look at the bigger picture of some years to come. Bitcoin is unstable, yes, and there is quite the distance to cover in resolving this. The driving factor behind bitcoin’s growth this year has been the wider public coming to know much more about it and beginning to accept it as the currency of future trade. Bitcoin’s future depends to some extent on the approval it will receive from various governments and their central banks – something it doesn’t have from any at all, at the moment. But as big names like Amazon, Apple begin to look for means to integrate bitcoin into their payment systems, bitcoin might as well just have that bright future then.
- American Express Partnership Sets Ripple Into High Priority Chinese Market - Nov 14, 2018
- What To Expect In Ethereum Scalability 2019 And Beyond - Nov 14, 2018
- Ethereum Sees Above Ground 200 Again After JP Morgan Statement - Nov 5, 2018
- Bounty Hunts And “All About Freedom” – October’s IOTA In Retrospect - Oct 29, 2018
- Shenzhen Court Rules For Bitcoin Transactions In China - Oct 26, 2018
Know more than others on any Blockchain Party!
Join more than 5000 others to receive the breaking news and weekly summaries! No ICO spam, we promise.
You have Successfully Subscribed!