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This time it’s different. Unlike what happened in 2017, Bitcoin is not on the first page of the newspapers and there isn’t a ‘gold rush’ to buy it. But the price of the most popular crypto recorded a 100% jump in just a few months and investor interest is regaining momentum. The market capitalization of cryptocurrencies jumped from a low of $105 billion at the end of 2018 to $220 billion. This does not mean that bitcoin is suddenly a good store of value, nor that it can be easily used for most payments now or in the near term. Who would be happy to receive their wages in such a volatile currency? And there is still a lot to do to improve wallet safety and the security of the entire sector, as demonstrated by the many scandals surrounding cryptos in the last few years. But despite all this, bitcoin, and a few other carefully picked cryptos, could be an interesting way to diversify a portfolio.
The rule behind all this should be the prudence. E-currencies should represent a minimal fraction of the full investment portfolio. From a shorter-term perspective, there are various considerations to keep in mind on Bitcoin and cryptos. Thanks to the sharp fall seen in 2018, there could still be an interesting potential for rebound.
Let’s go back for a deeper analysis. In 2017, we saw the rally of cryptos, with bitcoin prices exploding from $1,000 to an historical peak of $20,000. The scenario dramatically changed in 2018, just after CME and CBOE launched bitcoin futures. Prices took a dive, posting an 80% fall to below $4,000. The scenario was similar for other cryptos, with impressive rallies in 2017 (for Ethereum, Ripple and Litecoin the rise was even bigger than for Bitcoin), followed by a crash in 2018, with prices falling by more than 90%. In just a few months Ripple tumbled from $3,30 to $0,30, later reaching a peak of $360. Litecoin lost around 95% of its value, declining to $24.
After the market wiped out the small players, 2019 started positively, with a recovery in most cryptos. We have also seen a recovery in the cryptos which have a serious project behind them, while those without solid foundations (some of them could almost be classified as a scam) are still close to zero. The scenario is now different from the rally of 2017, as investors are more cautious picking e-currencies and no longer rushing crazily to grab them at any price.
This time it’s different. Unlike what happened in 2017, Bitcoin is not on the first page of the newspapers and there isn’t a ‘gold rush’ to buy it. But the price of the most popular crypto recorded a 100% jump in just a few months and investor interest is regaining momentum. The market capitalization of cryptocurrencies jumped from a low of $105 billion at the end of 2018 to $220 billion. This does not mean that bitcoin is suddenly a good store of value, nor that it can be easily used for most payments now or in the near term. Who would be happy to receive their wages in such a volatile currency? And there is still a lot to do to improve wallet safety and the security of the entire sector, as demonstrated by the many scandals surrounding cryptos in the last few years. But despite all this, bitcoin, and a few other carefully picked cryptos, could be an interesting way to diversify a portfolio.
The rule behind all this should be the prudence. E-currencies should represent a minimal fraction of the full investment portfolio. From a shorter-term perspective, there are various considerations to keep in mind on Bitcoin and cryptos. Thanks to the sharp fall seen in 2018, there could still be an interesting potential for rebound.
Let’s go back for a deeper analysis. In 2017, we saw the rally of cryptos, with bitcoin prices exploding from $1,000 to an historical peak of $20,000. The scenario dramatically changed in 2018, just after CME and CBOE launched bitcoin futures. Prices took a dive, posting an 80% fall to below $4,000. The scenario was similar for other cryptos, with impressive rallies in 2017 (for Ethereum, Ripple and Litecoin the rise was even bigger than for Bitcoin), followed by a crash in 2018, with prices falling by more than 90%. In just a few months Ripple tumbled from $3,30 to $0,30, later reaching a peak of $360. Litecoin lost around 95% of its value, declining to $24.
After the market wiped out the small players, 2019 started positively, with a recovery in most cryptos. We have also seen a recovery in the cryptos which have a serious project behind them, while those without solid foundations (some of them could almost be classified as a scam) are still close to zero. The scenario is now different from the rally of 2017, as investors are more cautious picking e-currencies and no longer rushing crazily to grab them at any price.
