The price of Bitcoin has been suffering since the start of the year, and with Lloyds Bank banning their credit card users from buying cryptocurrency and China tightening their rules around cryptocurrency in general, it’s no great surprise that the crypto market is shrinking.
Cryptocurrency has always been a turbulent ride for investors, and with the market and the technology it’s based on still being in their infancy, it can be an intimidating arena to step into.
Interested in some alternative cryptocurrencies? Check out our 10 coins to watch in 2018.
Can I still get rich with Bitcoin?
While I’m certainly not a financial advisor and won’t give you investing advice, what I can offer you is some information.
After going through a very strong upwards trend at the end of last year, the cryptocurrency market as a whole is currently seeing a large correction.
This could be the end of the cryptocurrency bubble, as some level of reconciliation between the intrinsic value and market value seems to be taking place across the market.
The golden rule of trading being ‘buy low, sell high’ sounds simple enough to understand and also walks hand-in-hand with Warren Buffett’s famous quote:
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
This is all fine and dandy, as Bitcoin has gone below it’s 200 day moving average it’s cheaper (relatively) than it has been for a long time, and people are certainly fearful at the moment. This makes prime buying conditions, assuming you think you know the answer to the following questions.
Do you think the price will continue to drop, and do you think the price will go back up?
If you are 100% positive of the answer to these questions then you’re either a time traveller or a wizard. If either of these is the case, do e-mail me for an interview.
Pros of Bitcoin
Being the most recognisable cryptocurrency, Bitcoin has the advantage of being known to the widest audience which is a large part of the reason why it’s reached its current status. Most people will have heard of Bitcoin, where as they might not have heard of Ethereum or Ripple, and as with any other industry – exposure is key.
Ethereum is widely regarded as Bitcoin's biggest rival, and is posed to take the cryptocurrency throne. Find out about it here.
As the ‘old guard’ of cryptocurrencies, and with a relatively low coin cap of 21 million, it’s likely that Bitcoin will hold its value well as it becomes harder and harder to mine it, and will always be used to hold wealth.
Cons of Bitcoin
Compared to some of the newer cryptocurrencies coming out, Bitcoin’s technology is starting to look a bit dated.
Bitcoin has issues with scaling, as the more people use their blockchain, the slower and more expensive it will be to complete a transaction across their network. Ethereum, one of Bitcoin’s main competitors, has far more daily transactions as their network is faster and cheaper.
Bitcoin’s use is also centred on just being an alternative currency, where as other projects have a more directly practical aim, be that solving a problem in a particular industry or being a platform for other blockchain initiatives.
Should you buy Bitcoin now?
Current speculation suggests that Bitcoin still has a little further to fall, perhaps down to the $4,000 or $5,000 mark. The market was in dire need of a correction and this current downward trend is likely to continue for a while yet, so I personally don’t think we’ve quite reached the bottom.
Will the value of bitcoin recover again back to it’s all-time-high at just under $20,000? That’s a much tougher question to answer, but considering cryptocurrency isn’t anywhere close to being widely adopted by the masses (yet?), I think it would be unreasonable to assume the market in general has been anywhere close to it's full potential.
However, that is assuming that Bitcoin keeps being adopted by more and more people and isn’t surpassed by something else altogether. There are plenty of coins trying to do what Bitcoin is doing and arguably doing them better, such as Litecoin, Ripple and Nano.
As with anything else, it’s important to do your own research and drawn your own conclusions. Above all, never invest anything that you are not willing to lose.