Investing in Cryptocurrencies Now or It’s Too Late?

A worldwide Bitcoin “fever” is gaining momentum. Daily traded value of cryptocurrencies are enormous and continue to increase. Is it time to join cryptocurrency enthusiasts or maybe it’s too late?

Over the last 8 months, the bitcoin has more than doubled its price. This quick growth was exactly the thing that attracted a lot of attention from the people, who are “miles away” from investing or trading on the stock exchange. The media hype spread and, as a result, quotes became much more volatile. The demand for computer hardware has been increasing ever since: those, who wish to earn, buy graphics cards and other hardware to set up “farms” and ”mine“ cryptocurrency.

However, the more people are getting involved in this process, the more doubtful it is that all participants of the process will earn the same amount of money as they did before. It’s very expensive: in order to “mine” cryptocurrency, one requires powerful graphics cards. Apart from hardware expenses, one should also take into account electricity prices. But if you don’t have a possibility to generate your own cryptocurrency, you can buy one on the stock exchange.

The risk of working with the bitcoin is that the programming source code implies that there is a finite amount of the mined cryptocurrency. Obviously, apart from the most popular and significant “digital brand”, there are others, such as the Ethereum or, for example, the Litecoin, and a lot more. New cryptocurrencies emerge every day, but what may happen next?

The future outlook will brighten when countries and governments accept cryptocurrencies as official means of payment. So far, it has been done only by Japan. Australia weighs options. Vietnam is ready to redeem bitcoins in real money starting 2018. The USA and Canada applied serious requirements to stock exchanges that provide the Initial Coin Offering (ICO). In fact, they will be the same as to the Initial Public Offering (IPO). In addition to that, the regulators’ requirements to the stock exchanges, which trade tokens, are also toughened. The more it spreads, the higher the fraud risk: global regulators understand this and try to take control over these processes since they can’t completely control cryptocurrency itself.

In the meantime, each new high only heighten investors’ interest to cryptocurrency. At the end of August and the beginning of September, the Bitcoin reached another new peak and the chances are high that until the end of the year this digital rally may continue. However, the “entry” price right now is too high and it would be better to weigh up all options before “catching up this train”.

There is no absolute answer to the question whether it is time to open long positions in cryptocurrencies or it is too late. The other day, it became known that the largest Chinese bank had banned the ICO. In reply, the market plummeted and there is no guarantee that it will recover very quickly. They say when “the crowd is heading to the same door”, it a signal to close positions in the asset. When it comes to cryptocurrencies, it happens every day, but earlier the Bitcoin quotes recovered without any problems no matter how severe the stress was.

When buying the asset at its highs, one should remember about all associated risks. Cryptocurrencies yet have a lot of reasons to update its prices, but what might happen to the world when faith in the virtual currency fades away? That’s right, the market will be flooded with massive sales.

RoboForex is a group of companies that offers brokerage services to clients in various countries over the world. The group provides traders from the Forex and stock markets with access to its proprietary trading platforms. 

Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.