Invest in Bitcoin?
It is clearly he front runner among all the various cryptocurrencies and has steadily consolidated its presence. As more people invest it bitcoin, it is reflected in the increased trading volumes across the exchanges around the world. With more investors taking it seriously and using it as portfolio diversification tool, Bitcoin has proven to be a reliable channel for temporary hedging. Owing to these characteristics, it is being considered as digital gold since its supply is also limited. As we have an estimate of when its production comes to a halt, long term investments in Bitcoin are feasible. Based on historical data and trade driven analysis, here are a few scenarios where mid to long term investments in Bitcoin might be a good idea:
Governments working towards adopting Bitcoin:
Any news which promotes the adoption of Bitcoin, especially by the Government strengthens the positive sentiment towards it, more people decide to invest in bitcoin. When Silk Road was closed and bitcoins were seized, the currency came under a negative light. But when the US Senate held a hearing in the later part of 2013, under the title “Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies” and many senators came to consensus that Bitcoin holds great promise, the trading price of Bitcoin boosted remarkably ( $685-$1072 in 10 days).
Later in 2015 New York State Department of Financial Services released a set of customized rules. These were meant to regulate Bitcoin and digital currency businesses. They were the first ever set of rules directly targeted at digital currency businesses. There was a significant rallying in price which shows how positive, their adoption is for the market sentiment.
Major firms adopting Bitcoin as a payment method:
When mainstream companies adopt Bitcoin as a payment method, more people invest in bitcoin and it has a positive impact on prices. These opportunities would be ideal for mid-term trades. This is owing to the fact that something as nascent as Bitcoin has found roots in the existing system which strengthens its credibility and onsets positive sentiment. This was clearly observed when companies like Microsoft, Dell, Paypal and Overstock.com embedded Bitcoin in their payment systems.
Launch of new Bitcoin exchanges:
Whenever a reputed firm in the Bitcoin world undergoes change, it will have implications on trading prices. The launch of new Bitcoin exchanges or structural expansion of wallet companies or blockchain technology companies into newer areas is always a positive sentiment marker which encourages more people to invest in bitcoin. (Coinbase and Gemini exchanges are good examples). Depending on the sheer volume of the change or launch, mid or long term investments can be planned.
Global acceptance or macroeconomic factors:
In early 2013 when People’s Bank of China accepted Bitcoin, new trading volume started flowing in. The price of a bitcoin shot up by $ 400 in a span of 10 days and the market went berserk. A similar sentiment was observed when EU declared that there would be no VAT (Value Added Tax) on Bitcoin Trades.
Though China took a negative stance on Bitcoin, increased volumes in Bitcoin trading while Yuan was devaluated were observed. Major global events where people look at Bitcoin as a hedging option, always drive up its trading prices. This makes these events ideal scenarios for investing.
Basing on these factors and clever entry positions, one can plan profitable investments in Bitcoin that are assured to give good returns.