Bitcoin – Am I too late?
Many will be reading the latest news and wondering what is going on and how Bitcoin can continue to break into unchartered territory with little to no resistance.
The big question that many investors will be asking themselves is whether it’s too late to get into the Bitcoin rally. History has told us to take a more cautious approach when looking at investing and the Dot.Com rally is a stark reminder to many of just how badly things can go wrong for those that enter the market too late.
Some may have considered the summer to have been the end of the rally, when Bitcoin dropped back to sub-$2,000 levels. Others may have considered it to have been the end when the Chinese government shut down Bitcoin exchanges and the remaining sceptics may have considered the mid-November blip to be a sign that things were finally turning around for those less convinced of the Bitcoin phenomena.
Some of the world’s most prominent CEOs have staked their reputation on Bitcoin being nothing more than a dangerous investment, a bubble ready to burst. Well, upon every dip that Bitcoin falls back to, more investors seem to pile in to take advantage of the cheaper offering, convinced that a new record high will follow.
Until now, the investment strategy has certainly born fruit for many, but there are many still on the side lines and quite a sizeable amount of institutional money is sitting on the side lines, waiting to enter the fray.
So when faced with the question of whether it’s too late to enter, while some may be calling it the madness of Bitcoin, others will be taking a chance. Who wins and who loses has yet to be determined, but one thing is certain, if the side lines are where some are more comfortable, then Bitcoin is probably not the investment to be looking at.
For those who do get in at current levels, Bitcoin is up 6.11% today alone. Year-to-date it’s up more than 1,100% and let’s not even talk about what returns have been seen since the early days.
There’s plenty of incentive for the Bitcoin community to be talking of outrageous price forecasts for the years ahead. We’ve heard talk of Bitcoin hitting $40,000 by the end of next year, with some even suggesting that Bitcoin could hit $1m in the next few years. The latter puts the $40,000 into the more reasonable category of forecasts, which is particularly troublesome in itself.
Hard forks and a continued battle between Bitcoin’s core developers and the mining cartel remain immediate negatives for Bitcoin. We’ve seen hard forks weigh on investor sentiment, though until now we’ve yet to see a true adversary to Bitcoin emerge. Is it only a matter of time before one hard fork bursts the bubble? As things stand, unlikely, but the risk remains. Of greater risk to Bitcoin and the cryptoworld in general is a regulatory one however. While the UK and Indonesian government may be taking their stance, will the Chinese government or the SEC look to take a similar position on Bitcoin in the months ahead. This is quite an unknown and there will unlikely be any forward guidance that is enjoyed by those exposed to fiat currencies.
Is it too late? Well, it’s never too late, not while Bitcoin continues to break records, but the investment strategy should be perhaps a more cautious one than those who entered in the early days or even at the beginning of the year. Stop losses and not betting one’s shirt would be two simple rules to follow.
It’s been a compelling story and perhaps there is a lot more to come. Time will tell.