The price of bitcoin (and other cyptocurrencies) is surging, specially in the last months which it’s been constantly reaching historical highs making it a very interesting instrument to monitor…
But is it really the time to start trading it?
Read on to see what I think about this…
There is no doubt that the future of human transactions are cyptocurrencies: bitcoin, ethereum, ripple, etc.
But it might take a while before that happens.
There are so many things that need to happen before that, the most important of them all: regulation.
The legal status of these cryptocurrencies is still undefined… Some countries restrict their use, while others have explicitly allowed them.
So once most countries agree about how to treat and trade with cyrptocurrencies, its going to have periods of massive volatility.
I want you to look at both, the Bitcoin and Ethereum charts:
Bitcoin Daily Chart
In the case of Bitcoin, one day it reached it was trading above the USD$2,700 mark, two days later it was trading below 1,900.
That’s more than a 30% variability, in just 3 days…
Ethereum Daily Chart
Now look at Ethereum, one day it was trading around USD$110, 3 days later, it traded at USD$230, that’s more than a 100% change in just a few days…
That’s a lot of volatility my friends… not tradable.
To put this into perspective, currency pairs vary around 1%, 2% at most in a regular day…
So to answer the initial question, no, I don’t think its time to start trading Bitcoin or any other cryptocurrency.
At least, not in the way we trade currencies or other instruments, with leverage.
Long Term Investment
If you have the possibility to buy some cryptocurrencies (specially the ones mentioned above), and have some spare capital to invest (for the long term)… You might want to try it.
Which one should I invest in?
Look at this chart from Bloomberg, about the market share of these three cryptocurrencies:
(Maybe in Ethereum?)
Again, with no leverage, it might be a very good long term investment. But is very risky as well. So you need to really think and analyze your posibilities.
For me, I think I’m going to wait… So I will be on the sidelines on cyprtocurrencies for the time being.
Whats your take on cyrptocurrencies?
Have you traded them?
What broker do you use to trade them?