There’s no question – Bitcoin’s been on an epic rollercoaster ride of late with the latest market figures valuing it at a mere $7,417 compared to the $19,343 highs of December 2017.
But it’s not the only cryptocurrency that’s suffered, with Ethereum and Ripple both experiencing similar drops – so is it the end for the newest currencies on the block(chain); or should you stay strong and HODL? At Wirex, we’re here to help you ride through the storm – here’s what we think.
A glitch in the matrix
Let’s not forget – we’ve been here before…several times. But the market has usually always bounced back – and often bigger and better. Whilst it’d be easy to panic and sell, sell, sell, it’s worth understanding why we’re here in the first place.
For starters, South Korea recently announced that it would investigate regulating cryptocurrencies – coming from the third largest Bitcoin trading market in the world – that’s a big deal. Plus, social media and online giants such as Facebook and Google, have recently banned cryptocurrency ads from appearing on their platforms.
Google’s ban will be enforced from June and extends to related products such as currency exchanges, wallets, and initial coin offerings (ICOs) in an attempt to protect users from scams. The culmination of these events has resulted in the current destabilisation and devaluing of Bitcoin and other cryptocurrencies – no big surprise.
A case of déjà vu?
Bitcoin prices fluctuate dramatically – fact.
But fiat currencies experience their highs and lows too, with the South African Rand, the Brazilian Real, and the Turkish Lira taking the top spots in the world’s most volatile currency contest, 2017 according to Bloomberg. In fact, the poor old pound isn’t much better, ranking at number eight when it comes to currency fluctuations against the US$ (and no-one’s yet to say the pound has had its day).
Of course, the whole concept of cryptocurrency is so far removed from the coins and notes we’re programmed to use, that any fluctuation is going to send shivers and shockwaves through the community and create wild speculation outside of it.
However, the point is – all currencies go through their boom and bust cycles – the US$ in 1929 and again in the 1940s, and Sterling’s mega inflation of the 1980s. But if enough people believe in the concept – it’ll work itself out in the end. And let’s not forget, Bitcoin is less than ten years old and the concept largely unprecedented, meaning predictions about its future can’t be made with any true accuracy (but isn’t this what makes it such a revolutionary and exciting idea?)
How to HODL
Naturally it’s tempting to sell-out when nearly everyone around you tells you to dump and run lest you end up the bagholder, but all trading needs is some nerves of steel – here are some tips:
- Think long-term: if you trade shares, you’ll understand how stocks fluctuate – and you’ll probably have some you’ve invested in for the long haul whilst actively trading in others for short term gain – crypto doesn’t have to be any different. Having an investment to nurture with a pot to trade on altcoins to spread the risk should fulfil the itch to keep things moving.
- Invest in tech: Bitcoin is more than just the sum of its Satoshis; consider investing in mining or blockchain technologies.
- Every cloud: if you’re an optimist, then what is a dip, if not a great opportunity to buy?
The way forward
Cryptocurrencies haven’t had their moment yet, and most governments have adopted a suck it and see approach, which has delayed any real attempts at understanding the way forward.
Recent rumblings about regulation don’t necessarily spell the end because regulation doesn’t always result in clamp down. It might actually prove to be the defining moment in the future of Bitcoin and it could force governments and financial organisations to collaborate and develop a common framework benefitting investors – and tax collectors. Because let’s face it, what government is going to turn down an opportunity to increase its revenue by taking a cut on cryptocurrency investments?
Our advice – you’ve got to do what feels right for your long-term investment and that comes down to why you chose to back Bitcoin in the first place. Whether you wanted to be part of the currency revolution, or simply saw an opportunity with a great ROI, fear not the FUDsters, sit tight and make your way to the moon.