Have investors found a new haven asset with Bitcoin trading?
No one can ignore Bitcoin’s rapid gains this year and it would be foolish to do so. Most investors are indeed looking for ways to capitalize on Bitcoin’s resurgence in order to maximize their profits. In fact, the deteriorating political climate due to the turmoil around the recent trade wars is definitely giving the stock market a run for its money and Bitcoin could be on its way to become the new safe haven investment for traders with little to no risk tolerance.
Bitcoin’s historical performance
The controversial cryptocurrency was launched in August 2008 and a few months later, in October, the whitepaper of the infamous Satoshi Nakamoto was published on several mailing lists. The whitepaper outlined the blockchain technology on which Bitcoin is built and how it could be used to generate transactions without a centralized authority. A revolutionary concept indeed.
The first Bitcoin bull run started in 2011, where it was trading at $0.30 – the price surged by 1,655% to $5.10 in under a year. An amazing run for sure but no one could expect that two years after it would manage to reach $770.44 in an unprecedented growth of 5,609%.
Then of course followed the meteoric rise and crash of 2018 with the price rallying to $20.000 and dropping soon after to $10.000 where the bear market started pushing it down towards $3.000.
And now, 2019 we are witnessing the crypto resurgence and Bitcoin is once again on another rally with its price currently floating around the $7.789 range while the bears and bulls battle it out.
Volatility drying up
The crypto leader is bound to find a higher high in the coming months but this June, trading volume and volatility are coming at a standstill as the market mulls over its next move.
It appears that crypto bulls have finally decided to take a break and price action is starting to slow down. Bitcoin trading volume on Coinbase.com was preparing to breach the $6 billion mark during the month of May but activity is slowing down as the price is hovering within the $8000 – $7800 boundaries.
However, while the bears are testing the key support levels, this would be a great opportunity to buy the dip and wait for the imminent rally. As always though, caution needs to be exercised and risk measures need to be taken in case we are witnessing a new downtrend. If you are looking to go long or short in BTC/USD pair, you should ensure that stop losses are in place since now it could go in either direction. Risk control should be top priority for traders and those who seek the big moves are more likely to find opportunities in other assets where the technicals provide a clearer view.
It goes without saying that making forecasts in unpredictable markets like crypto is nigh impossible but if past performance can serve at least somewhat of an indicator – we can expect healthy uptrends forming soon – even if they don’t compare in intensity to the previous years.
Most crypto enthusiasts are even recommending that newcomers invest in the altcoins with Litecoin and Ethereum being the favorites. And it’s not hard to see why as Litecoin and Ethereum currently enjoy healthy daily trading volumes at $5 billion and $8 billion respectively.
As more and more financial institutions invest in crypto, Bitcoin’s status as the digital gold and safe haven asset is cemented even further. Even though it’s far more volatile than gold, the digital coin seems unaffected by the global economic crises and could prove to be a viable alternative to the stock market.
With financial analysts anticipating Bitcoin to hit a new all-time high by the end of 2019, the time is ripe for investment and since altcoins historically follow Bitcoin’s movements; you can expect similar returns regardless of the crypto you choose to diversify your portfolio with.
There are numerous ways to extract profits from the financial markets but there are also a lot of risks involved. Cryptocurrencies may involve the same degree of risk, but they are slowly transforming the fintech industry to the point where they may soon prove to be a viable safe haven investment vehicle.