Bitcoin Forecast 2018 – Buy, Sell or Hold?

What does 2018 hold for bitcoin, oldest and most famous of the cryptocurrencies? 2017 was a miracle year for bitcoin with the price rising above $10,000 along with a storm of mostly positive publicity and announcements about the inevitable success of the virtual currency. For those many who bought into this version of events, January 2018 must have been a bad shock. Suddenly the infectious optimism and momentum that had been built up over the previous twelve months seemed to evaporate as bleak news appeared. The governments of Germany, China and especially South Korea announced that they would regulate or even ban the sale of bitcoin; South Korea merits its ‘especially’ label since it has become a veritable hub of virtual currency trading. On the back of this, a scandal arose as exchange BitConnect announced that it would cease operating, was accused of operating a Ponzi scheme with its own cryptocurrency, BCC, which lost 95% of its value overnight, and which also attracted the attention of financial regulators in the USA.

All of this, of course, would be enough to put a dent in anyone’s confidence and bitcoin fell back below its $10k mark, losing 25% of its value in three days. This seemed to reflect the predictions of those more cautious (and sometimes frankly insulting) voices that had spoken up against bitcoin’s successes in 2017. Some had invoked the specter of tulip-mania in 1630s Holland, while others had frankly described bitcoin as a ‘fraud’ that would soon ‘blow up’, probably in the faces of those who had invested in it. As the month-long contracts for the first tranche of traded bitcoin futures came to fruition leaving the investors nursing heavy losses, it was not easy to see any further than some of the more apocalyptic of the past predictions.

Yet the whole world of bitcoin is an uncertain one. Long-term observers have become the extreme volatility of this and other cryptocurrencies. Yes, the falls in January were spectacularly awful, but December had seen greater losses and gains over equally short periods. The truth is that some people actually bank on bitcoin’s extreme volatility and the way in which it does not behave like normal equities. In this way, bitcoin may resemble some aspects of gold and precious metals, which experience price hikes when the stock market is heading towards a fall. At the start of 2018 many were predicting an extreme correction of a stock market that was estimated to be 30% overvalued. If that comes to pass, bitcoin’s problems with regulation and fraud may seem like the lesser of two evils.
So the prospects for bitcoin in 2018 very much depends on the prospects for other things. About all we can say with certainty at the moment is that the Blockchain technology behind bitcoin will continue to develop and probably see further widescale adoption. We can also say for certain, that volatility will continue.

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