Is this rollercoaster ride getting too high? Bitcoin’s rise may be leading to vertigo.
As Bitcoin skyrockets towards $10,000, having hovered around $800 in January this year, people are rejoicing and celebrating the wild ride. However, as the rollercoaster seemingly only continues ticking upwards, there have to be some nagging questions.
Bitcoin has received more and more good news, especially when it comes to adoption. News about ETFs and Futures has attracted many Wall Street bankers, and all their institutionalized money flows into the digital currency realm.
The ease and availability of Bitcoin is fueling adoption and that in turn is fueling the demand and price. Of course, this sparks the bubble argument up every time, but there are other things to be trepidatious about.
This pace of growth seems unsustainable, but that does not mean it will pop, perhaps just slow down; and there are a few things to consider.
Sell the ETF and Future news
The rumors of Bitcoin ETFs and futures started circulating recently, and while they have moved on from rumors to confirmed, they have not yet been moved to being active. There is still some teething that needs to be done for futures, but when the system is up and running, it may be time to “sell the news.”
The whole idea of “buy the rumor, sell the news” is an adage rooted in the Bitcoin world and has proved itself a number of times. Now, when it comes to these easily accessible forms of Bitcoin buying - and selling - the market could well get a lot more liquid.
Liquidity and the buying and selling that will come with these options will not cause any damage to Bitcoin at all. However, what it could do is stabilize the volatility, which is a double-edged sword. Lower volatility means a flattening out - no more big drops, but also no massive spikes.
Cacophony of competition
While Bitcoin came into this world quietly, with nothing else to cause it any competing issues, things have changed dramatically. Bitcoin has a whole lot of other coins to battle with; ICOs keep popping up creating more and more for the market but also eating into Bitcoin’s own market.
Of course, many of these coins are a waste of time, and ICOs are not necessarily dilutive, but they will be enticing those who began with Bitcoin to try different things. Bitcoin Cash has been doing its bit to try and destabilize Bitcoin’s market, and such the money won’t all be pouring just into one coin.
Taking it more seriously
As Bitcoin and the rest of the cryptocurrency market starts to make a bigger dent in the global economy, this unprecedented, unregulated digital currency will start to garner more and more attention from governments and regulators.
There is no doubt that every country globally has heard of Bitcoin by now, but they are still divided as to what to do with the thing. There is a chance that as the price raises to these scary heights, the regulators could come smashing down.
China has already made its move on Bitcoin regulation, crushing exchanges and ICOs. However, the market has shown very little mind to these kinds of moves, but the more other get involved, things may be slowed.