Bitcoin is going through a tough first quarter of 2018. Since hitting its $20,000 all-time high last December 2017, Bitcoin price has dropped by more than 70%. As of the time of writing, Bitcoin is trading at the $8200 level, which is still a 60% decrease in value.
If you unfortunately bought during the high times, you may be reeling from a loss right now, and hoping that Bitcoin bounce back in the coming months. Despite all the negative news and FUDs spreading lately, there are many indications that 2018 would still be a great year for Bitcoin. Here are some reasons why:
- Big Money Selling is Coming to an End
One theory suggests that the decline in Bitcoin prices during the past several weeks is due to the Bitcoin selloff of Japanese exchange, Mt. Gox. The Japanese exchange unloaded $400 million worth of Bitcoin on the open market since the end of last year, which may have contributed to lower prices.
According to rumors, Mt. Gox will hold off selling until later this year, when the market has recovered. The Mt. Gox trustee is still holding around $1.7 billion worth of Bitcoin.
In addition to the Mt. Gox issue, Bitcoin futures trading is steadily increasing in volume, which encourages traders to consider hedging. Also, additional financial products like Bitcoin ETF can provide additional cash inflow.
1. Cryptocurrencies and Blockchain Mainstream Adoption
While many financial analysts are still skeptical regarding Bitcoin and cryptocurrencies, many mainstream businesses are now exploring the blockchain for improvements of their business models. Since Bitcoin is known as the Big Daddy of crypto, we may see positive effects on Bitcoin prices as more and more companies and investors get into cryptocurrencies.
2. Clarifications of Regulations
Government regulations may have been tough on crypto during the past months, but as counterintuitive as it may seem, a decent level of regulations is actually good for the cryptomarket. With certain level of regulations being more and more clarified, it can hopefully attract more investors.
Since cryptocurrencies can be considered as exchange-traded assets, the biggest enemy is uncertainty. This uncertainty is what causes the 10-20% daily swings in prices. With more defined and clarified regulations, cryptocurrencies may see more stability in the future, and thus may attract more big time investors and traders
3. Diminishing Selling Fears
After Bitcoin’s meteoric rise to the $20,000 all-time high, people who invested early started cashing out, which sparked the massive sell-off. As people started to take in their earnings, some people who invested late got overwhelmed by the selling frenzy, which prompted them to sell their Bitcoin even at a loss. 3 months after, we are here with some level of recovery. Although Bitcoin is not out of the woods yet as we may still see more corrections, investors are having diminished levels of selling fears. The weak hands have been shaken off, and the smart money from investors with real interests is starting to enter the market.
These factors are only four of the many reasons why Bitcoin still has a bright future ahead. 2018 will be a very interesting year indeed.