bitcoin investment analysis Archives

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Bitcoin Set to Soar to Record Highs in 2017

Posted on January 4, 2017 | by [email protected]

Bitcoin is starting 2017 from a position of strength with gains straight out of the gates as the markets opened for trading in 2017. 2016 was a mixed year for Bitcoin traders and investors as the cryptocurrency alternated between exciting highs and gut wrenching lows even though we had more gains than losses. 2017 is already shaping up to be a massively bullish year for Bitcoin traders and investors.

On Monday, January 2, 2017, Bitcoin built enough momentum to cross the $1000 milestone once again after it reached a 3-year high of $1,033. On Tuesday, January 3, 2017, Bitcoin showed that the gains in first trading day of the year were here to stay. As at market close on Tuesday, Bitcoin was already up to $1,062 as it moves towards its all-time high price of $1,216.70 that it recorded in 2013.

Here’s why Bitcoin is soaring

Source: Tradeblock

Bitcoin’s start in 2017 is interesting because it crashed as low as $200 in 2015. In 2016, Bitcoin started the year at around $400. Now, Bitcoin is starting 2017 above $1000 and it trades about 140% higher than its 2016 starting price. Without much ado, 2017 could turn out to be the year that the Bitcoin and blockchain technology gets mainstream adoption for finances.

The first reason behind the upsurge in Bitcoin prices is the increased interest in the cryptocurrency as fiat currencies start to falter in some economies. For instance, Bitcoin is becoming the go-to currency in Venezuela as inflation continues to erode the value of its currency.

In India, the Modi administration has removed the highest denominations from circulation as part of efforts to curb corruption. The removal of large bank notes has a negative effect on trade; hence, Bitcoin is moving in to fill the void.

In China, the wealthy top percentile is using Bitcoin as a measure to evade the government’s tight rein on money transfers. Beijing is very strict on how people can move money in and out of the country but Bitcoin provides a better alternative to the Yuan and USD.

What does the rest of the year hold for Bitcoin?

An objective analysis of the impressive start that Bitcoin has this year shows that speculative trades are fuelling a part of its bullish rally. To start with, the trend towards isolationism in the global political landscape suggests that fiat currencies are at risk of being caught in the crosshairs of an economic cold war. In contrast, the global decentralized nature of Bitcoin suggests that investors would be better served holding Bitcoin than holding other fiat currencies.

Vinny Lingham (@VinnyLingham)CEO of Civik Key and a Shark on SharkTanks notes that Bitcoin could reach $3000 this year because of increased interest in the cryptocurrency. In his words “the faster new money flows into Bitcoin, the quicker old money flows out. Slow & steady stores value. $3k should be our MAX target for 2017”.

A Trump Presidency Might be Good News for Bitcoin Investors

Posted on November 14, 2016 | by [email protected]

The surprising victory of Donald Trump the just concluded election has altered the narrative on the expected winners and losers after the election. Hillary Clinton obviously lost, the democratic establishment lost, the media lost, pundits, commentators, and pollsters lost big time. Interestingly, the emergence of President-elect Trump didn’t lead to a doomsday in stock contrary to expectations that equities will crash if Trump wins.

Of a truth, investors in the equities market panicked in the first few hours after news of Trump’s victory broke. For instance, the Dow Jones lost 3.8% in pre-market trading, NASDAQ was down almost 5%, and the S&P 500 declined by 3%. However, stocks quickly recovered and the Dow closed near record highs.

Victor Alagbe, an analyst at Stern Options opines that “stocks seem to be holding on quite well, at least for now, and the likelihood of a market crash has been postponed until Trump take over the reins of governance.” However, Bitcoin is on track to become the biggest winner from a Trump presidency. To start with, Bitcoin Surged about 4% to reach a new record high of $738.33 after news of Trump’s victory broke. This article explores some reasons why a Trump presidency will profit Bitcoin investors.

Bitcoin is an alternative asset

Source: Hedgeable

The first reason Bitcoin investors should prepare to see a surge in its value under a Trump presidency is its status as an alternative asset. An alternative asset is a non-traditional investment that tends to record an increase in value inversely to the stock market. Alternative assets make a good diversification play because they help investors to score gains when the stock market is recording losses.

The more interesting point to note about Bitcoin as an alternative asset is that it is potentially more valuable than other alternative assets such as gold and paintings. Bitcoin is divisible, it is a measure of wealth, and it is acceptable as a legal tender for the exchange of goods and services.

More so, the blockchain technology that backs Bitcoin is gradually coming to prominence. In fact, Aite Group reports that spending to adopt blockchain technology in the capital markets should grow by 52% CAGR to $400M by 2019.

Bitcoin is a decentralized currency

The second reason Bitcoin investors should prepare to see a surge in its value under a Trump presidency is its status as a decentralized currency. Bitcoin provide investors with an opportunity to diversify their portfolio away from traditional assets that are often influenced by government economic policies. It is no longer news that some of Trump’s economic policies might deviate from the trend that the markets been accustomed to in the last 8 years under a democratic administration.

The fact that Trump might champion protectionism during his administration means that the global economic landscape might suffer some massive changes. However, the changes in the global economic landscape will be mostly felt in the Forex markets. It is still too early for investors to know if the U.S dollar will be stronger or weaker when the global economic landscape changes. However, smart investors are already buying up Bitcoin in order to protect themselves from currency headwinds.

I have $50,000 in an IRA. Should I convert this to a Bitcoin IRA?

Posted on October 7, 2016 | by [email protected]

Investors are miles ahead of savers in the journey to financial freedom because investors have a chance to grow their wealth while savers can only expect capital preservation in the best-case scenario. Hence, it is not surprising that investors are always on the lookout for ways to tweak the assets in their portfolios in order to record bigger gains. People with an IRA are actually saving and investing money so that they can secure their financial stability during retirement.

If you already have some money in your IRA, it is not enough to check in occasionally or wait until your fund manager sends a statement of account before you know how your investments are faring. You’ll need to go out of your way to educate yourself about investments and to know the kind of assets that will give you the best ROI. If you have some money in your IRA, moving the money up into a Bitcoin IRA might be one of the smartest investment decisions you’ll ever make.

Bitcoin has a bright future ahead

One of the reasons that make it smart to move the $50,000 from your IRA into a Bitcoin IRA Account is that Bitcoin operates in an industry that offers potentially bigger returns. Bitcoin is one of the alternative investments in the market and the $50,000 in your IRA might offer you better returns if you convert it into a Bitcoin IRA.

To start with, the research firm McKinsey & Co. reported that the alternative investment markets worth about $7.2 trillion. Analysts at McKinsey also noted that investors typically record an annualized growth rate of 10.7% in the alternative investment market. In essence, the alternative investment market has doubled its market size in the last 10 years and it sports twice the growth rate recorded in other markets.

Price Waterhouse Coopers (PwC) has also released another research report showing that the alternative investment market will grow by $13.6 trillion by 2021. The PwC analysts observed that “Alternative asset management will undergo a transformation in the years to 2020 and beyond as it adjusts to a new operating and economic environment and moves toward center stage.”

More pointedly, Bitcoin offers one of the biggest returns on investment in the alternative investment market. Hence, doing a rollover of the $50,000 in your IRA into a Bitcoin IRA Investment might allow you score bigger returns. Bitcoin currently enjoys the first-mover advantage in the cryptocurrency industry and a $200 investment in Bitcoin in 2011 will be worth more than $1M today. No other investment can promise you a massive 500,000% growth in three years.

The best part of the whole scenario is that Bitcoin in an IRA will give you more peace of mind than an investment in equities or real estate. Potential retirees should avoid making financial decisions that could give them sleepless nights while raising their blood pressures abnormally. Stocks are very volatile and the volatility in the equities market will increase when the ripple effects of the Brexit vote becomes more pronounced.

Final words

From the aforementioned, it is obvious that you’ll be making a smart financial decision if you choose to rollover your IRA to Bitcoin. As a Bitcoin investor, you are investing in the rapid growth of the pioneer digital currency and you can expect to make massive returns before the rest of the investment community start trying to get a foothold in the cryptocurrency industry.

In addition, you’ll be taking the front seat in backing the blockchain technology that sets Bitcoin apart from other type of currencies. In essence, you can expect a monumental upside potential when the application of blockchain technology becomes more pronounced in traditional financial trading, payment processing, and in the banking industry.

Nonetheless, you should note that Bitcoin is a speculative investment and it might be wise to invest only a portion of your IRA into Bitcoin. If all the money you have in your IRA is $50,000, you’ll need to make an informed decision about the high-risk, high-reward nature of Bitcoin before you invest all the money in a Bitcoin Self-Directed IRA. However, the fact remains that no other investment vehicle can give your IRA the kind of massive boost that you can record from when your Bitcoin investment pays off.

3 Bitcoin trading events that every Bitcoin investor should know about

Posted on August 31, 2016 | by [email protected]

Getting to know the Bitcoin Market

Given that Bitcoin market is relatively new, investors share uncertainty about its long-term viability. Like other currencies, Bitcoin is susceptible to fluctuations in price and value. However, the mechanisms that govern Bitcoin are radically different than those of traditional currencies. Bitcoin uses peer-to-peer technology, which is a selling point for people hedging their bets against centralized government. However, in the event of a systemic failure, such as a market collapse, there exists no central authority to respond. In a conventional capitalist system, such as the U.S., for example, the Federal Reserve can intervene in times of crisis with monetary policy. The question then becomes: how effective is Bitcoin in times of failure? Although there is no definitive answer to this question, by examining Bitcoin’s historical performance in times of crisis, investors can improve their understanding of the asset.

Three Bitcoin Crises

Three consequential crises of Bitcoin include the regulation of the central bank of China (December, 2013)¹, the collapse of Bitcoin exchange Mt Gox (February 2014)², and the security breach of Bitfinex (August 2016). Each of these events directly impacted the price of Bitcoin, pictured below.

Source: Coinbase

Bitcoin is Risky

In examining each of these failures, investors should consider the recovery process and the probability that a crisis will repeat itself. The regulation of the central bank of China was an unusual event; many investors were forced to exit the market and the remaining pool of investors became increasingly aware of the potential for regulation. The resulting slide in value of Bitcoin reflects the shift in regulatory risk analysis. This shift demonstrates that changes in legislation are often unpredictable and can have severe implications for Bitcoin price. To date, the price has not recovered to its high of December 2013. However, despite regulatory burdens, China has resumed high levels of Bitcoin consumption.

The collapse of Bitcoin exchange Mt. Gox and security breach of exchange Bitfinex demonstrate the market risk of database failures. Importantly, each of these cases was a result of human error. The blockchain did not fail, which possibly contributed to value recovery. In considering the recovery periods of each of these events, Bitcoin price recovered to 100% of its value within three weeks of the Mt. Gox collapse³, and has recovered to 97.5% of its value within a week of the Bitfinex collapse³. Despite lacking a centralized system, in each of these cases, after an initial loss, Bitcoin retained much of its value.

Sources

Library of Congress: Regulation of Bitcoin in Selected Jurisdictions
CoinDesk: Mt Gox: The History of a Failed Bitcoin Exchange
CCN.LA: China now Controls Bitcoin (and that’s just the Beginning)