With 21st century demand for fast and significant profits, one of the most controversial new investment vehicles is Bitcoin, the virtual currency. It is controversial partly because of its volatility, partly because of the instability of Bitcoin exchanges and partly because of their unparalleled traceability which made it a preferred means of payment for criminals.
Things are changing and, after a particularly volatile period during which one of the major markets, MtGox, has filed for bankruptcy, the currency seems to have stabilized to allow the investor to take a measured measure to risk his money. in a technically non-existent currency.
Volatility
Although bitcoins are becoming increasingly popular, the market remains relatively small, which means that good and bad news can have a disproportionate effect on price. The long-term prospects for Bitcoins are potentially good, which means that the price increase is stronger than the long-term downside. Most brokers recommend to consider Bitcoin as an investment in the medium and long term because of its volatility. Think of it in terms of real estate. Nobody buys or sells homes multiple times a day and there may be a significant drop in real estate prices but the long-term trend of real estate prices is generally on the rise . The same can be said for Bitcoins. Although daily currency trading is important, many Bitcoins are held as investments, with analysts believing that the price of Bitcoins is likely to increase in the long run as they are increasingly accepted.
influencers
As with all financial instruments, prices are influenced by supply and demand. Bitcoins are not different, but what has caused large price swings is the unusual nature of the information that has influenced supply and demand:
• The bankruptcy of MtGox, one of the biggest Bitcoin exchanges
• The closure of Silk Road, which allegedly accepted Bitcoins for drug trafficking
• The disclosure by the US government that, despite the negative uses of Bitcoins, they believed that the currency had a future
• The media also garnered media attention by reporting on the significant events of the currency's rise and fall, announcing an increase of more than $ 1,000 and a consecutive plunge.
As a general rule, it is advisable to invest in Bitcoins and watch the market for a few weeks to get an idea of how the currency works, its volatility and its trend. It's hard to find a rumor that has no immediate effect on value. Many therefore suggest investing a small amount and simply looking for opportunities. on Bitcoins; its process is a little longer and less automated.
As with any investment, value can fall and events such as the collapse of MtGox and the closure of Silk Road have had a negative impact on Bitcoins. not only because demand was reduced, but also because bitcoins were falsely linked to business by the urban myth. The market seems to be becoming more regular, but not necessarily regulated, as more and more exchanges are connecting. Some of the exchanges will take place in the same way as MtGox, but others will consolidate and become stronger and more reliable. There is no doubt that official regulations will apply to Bitcoins in due course, at which time volatility should decline.
Bitcoins are an exciting and potentially lucrative investment vehicle in the medium and long term. Interesting because it has not yet been accepted in most currencies or investment vehicles. One thing investors like about Bitcoins is their belief in prospects
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