Investors will make the most of crypto volatility
Volatility returns to the crypto market after quite some time, with leading cryptocurrencies Bitcoin and Ethereum, and others, in the red on Monday.
Indeed, the world’s largest cryptocurrency by market capitalisation, Bitcoin, has dropped in price by $1,400 in 12 days and gone under the $5,000 threshold for the first time since October last year.
Whilst only a few weeks ago, cryptocurrency traders were expressing concerns over the lack of volatility in the crypto market, however, now the volatility is back, shrewd investors will be using this as a major buying opportunity, which could be the last one of the year.
Savvy investors are aware that cryptocurrencies are the future of money and they will therefore be making the most of the lower prices to build their portfolios and shore-up their positions.
First is the uncertainty surrounding the Bitcoin Cash hard fork.
Last week we saw the launch of a new version of Bitcoin Cash, a ‘fork’ from the original Bitcoin blockchain. Bitcoin Cash is now known as Bitcoin ABC and the new fork is called Bitcoin SV.
These forks create turbulence in the market as investors have to choose which version they will back.
Second, is the scrutiny of the Securities and Exchange Commission. I have long been a supporter of regulation of the crypto sector. Indeed, to my mind crypto regulation is now inevitable, and will provide investors with enhanced protection, boosting confidence and prices in the flourishing market.
Third, is the so-called ‘herd mentality’ of certain investors. Put simply, some of the digital currencies are lower because they went lower.
As predicted, crypto cynics are using this latest bout of volatility to disparage digital currencies. Whether it is Bitcoin or any of the present cryptocurrencies, it cannot be denied that digital currencies are here to stay.
The way financial traditionalists consider cryptocurrencies today is akin to how traditional stores viewed online retailers back in the day.
However, by keeping their heads in the sand, they cannot see that cryptocurrencies have already changed the way the world handles money, performs transactions, does business and manages assets, forever.