“[Bitcoin] is a bold entrepreneurial technology. It’s driving a revolution… There’s a big industry around Bitcoin. – People have made fortunes off Bitcoin, some have lost money. It is volatile, but people make money off of volatility too.” – Richard Branson
Richard Branson, in his quotation mentioned above, rings true in more than one way. The Bitcoin industry, including the blockchain platform it is built on, is a massive industry. In other words, there is no doubt that Bitcoin is here to stay. Therefore, the questions that should be asked and answered are around Bitcoin’s long-term value and whether it will reach the price levels achieved in 2017.
Bitcoin, released in 2009, is the first decentralised digital currency the world has seen. It is essential to remember Bitcoin’s inception date because it demonstrates the fact that both Bitcoin and the cryptocurrency industry is young and needs time to mature into a stable industry.
For the first 15 months (January 2009 – March 2010) of its life, Bitcoin was worthless. The price crept up to $31 by July 2011 and dropped back to $2 in December 2011. It slowly started increasing again and hit $266 on 11 April 2013. Again, this was followed by a drop back down to $110 in July 2013.
The first price spike occurred on 29 November 2013 when the Bitcoin price rose to $1242. It crashed back down to $600 in December 2013 but stabilised in the $800 – $900 range for January 2014.
Once again, the Bitcoin price rose and dropped from February 2014 but fell to its lowest level at $200 in May 2015. It hovered around these levels until November 2015 when it spiked to $504. Finally, the price started rising again in May 2016 and, with small price increments and decrements in between, it started climbing rapidly between May 2017 and December 2017 where it reached highest ever levels at $17 900.
January 2018 to today has seen a rapid drop in the Bitcoin price to its current levels of around $6000.
Market sentiment seems confident that the Bitcoin price will recover and could even achieve higher levels than its December 2017 highest point. The biggest reason for this sentiment is that the cryptocurrency industry is maturing and Bitcoin is likely to evolve into the new Gold Standard. Furthermore, if we look at the historical price data detailed above, we can see that it is “normal” for the Bitcoin price to go through significant spikes and dips while it climbs to new highs.
A final question that begs, is whether money can be made while utilising the CFD investment vehicle to trade on the Bitcoin’s price movements. In fact, the more volatile the price, the higher the trading outcome (both positive and negative). It is also important to note that the same principle applies to all of the other cryptocurrencies that are available to trade on.
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