In 2013, Bitcoin made headlines for its colossal rise in value. Within six months, the cryptocurrency’s price rose from $100 to $1250, a massive 12.5 times increase in value. These days, Bitcoin is less volatile with the price stabilizing at the $400-$600 range. If you are still planning to invest, you should at least be aware of the threats and opportunities that the digital currency may face this year.
Threats for Bitcoin
In the world of cryptocurrency, Bitcoin is still the king but other currencies are looking to take the crown. Virtual currencies like Nxt, Monero and Peercoin may not pose a threat as of yet but may give Bitcoin a run for its money in the future.
The tremendous price surge that investors saw in 2013 makes it almost impossible to fundamentally value Bitcoin. Without strong fundamentals, there is a huge possibility that the currency is already overbought and if that is the case, it may be due for a major correction.
Traders are in favor of the digital currency because the network is unregulated and they can even use Crypto Signal Group. Government crackdowns or any hint of intervention could send Bitcoin’s price spiraling down. This has already happened once, courtesy of the Chinese government which resulted to a huge price drop overnight. If it happened before, it can always happen again.
Currently, the currency is dominated by speculators and hardcore computer enthusiasts. The public has yet to be convinced of the cryptocurrency’s value.
Online thieves are lurking, waiting for the opportunity to strike. In June 2013, Allinvain suffered a massive bitcoin loss after hackers compromised the computers they were using. The robbery left Allinvain 25,000 bitcoins poorer which at the time of the hacking was valued at $500,000.
Opportunities for Bitcoin
Emerging markets like Turkey and India are feeling the sting as the US continues to taper its economic stimulus. Furthermore, the improvement of America’s economic outlook has prompted big money investors to come back home. If this trend continues, countries involved are vulnerable to inflation. Such a situation may come as good news to current bitcoin holders. When the rich citizens of those countries realize what is happening, they may opt to trade their currency to a currency that is not susceptible to inflation. By nature, Bitcoin is deflationary and that might just be enough to attract investors from emerging markets.
The launch of Bitcoin’s killer app will definitely engage the public and initiate the general adoption of the cryptocurrency. If more and more people become convinced of Bitcoin’s validity, it will put the exchange to a buying frenzy, and if this happens, the currency’s $1124.76 all time high can be easily surpassed.
The extreme volatile nature of bitcoin has kept many investors on the sideline. Currently, the price is stabilizing and if this is coupled with improvements in services and security, it will not be long until mainstream investors join the bandwagon and drive Bitcoin’s price up.