Complex Made Simple

Have “crypto” in your company name and ride 2018 to fortunes and fame!

Bitcoin passed the $19,850 mark on 17 December, but tumbled rapidly soon after, falling to below $12,000 within days.

It’s on the up again.

Bitcoin and cryptocurency are here to stay, in one form or another, else the world decides to turn the clock back and scratch the word ‘digital’ from our vocabulary.

Until it makes up its mind about how much it really is worth, its price will keep swinging like a pendulum.

With only a few days left before the New Year, we take a look at 2018 predictions and strategies that could mean you break the bank.

Itching to know what the experts say?

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Hussein Sayed, Chief Market Strategist at FXTM, comments saying that compared to most financial markets which are in vacation mode, Bitcoin was wide awake before and after the break.

“After crashing by more than $8,000 from an all-time high, Bitcoin is up 3.5% at the time of writing. During 2017 the cryptocurrency crashed by 30% or more six times. Every fall was followed by huge price appreciation until it peaked on 17 December,” Sayed said.

“I still believe that Bitcoin is in a bubble formation. However, there’s no effective test to measure at which stage we are currently standing.”

For Bitcoin, there isn’t any fundamental basis to justify the price.

“Traders should look at multiple factors to anticipate the next move, such as government regulations, hedge funds interest, the stability of the network, and broader mainstream adoption.”

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Bitcoin traded at around $15,669 Wedensday while rival digital currencies, such as ripple traded 6.85% higher, ethereum and litecoin fell 1.2% and 3.1% respectively, according to data compiled by Bloomberg.

“Nobody knows the ultimate value of this underlying asset,” Edward Stringham, president of the American Institute for Economic Research, a Massachusetts-based research group, said on Bloomberg Television. “We cannot predict whether it’s going to be zero or one million dollars or anything in between.”

According to Bloomberg, Bitcoin’s rally this year has prompted investors to invest or buy shares in companies that have interest in or ongoing transactions with crypto and when the digital coin tumbled last week, the proxy stocks slumped with them.

But the frenzy is evident with companies changing their names to attract business or a rise in stock prices.

Case in point is Long Island Iced Tea Corp. Whose shares rose 238% after the company rebranded itself Long Blockchain Corp.

“Bitcoin Investment Trust, a structured note that tracks the price of the digital token, jumped 22 percent. The publicly traded vehicle’s price exceeded the value of the bitcoin it holds by almost 100 percent three days ago,” said Bloomberg.

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Nolan Bauerle, director of research at CoinDesk, attributed price recovery to improved access to buying cryptocurrencies.

“After last week’s sell-off, order books got some breathing room,” Bauerle said in an email to CNBC. “Those that wanted to buy at all-time highs suddenly saw discounts and more importantly could actually buy from exchanges that worked through the backlog.”

CNBC said the CME bitcoin futures expiring in January settled nearly 11.7% higher at $15,785, and the Cboe bitcoin futures settled up 13.3% at $15,810. Trading volume in the Cboe January contract was above 2,300, while the CME equivalent was near 2,000, according to their websites.

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Central banks have largely kept their hands off of Bitcoin and other cryptocurrencies, despite speculations that 2018 will be the year that financial regulators add Bitcoins to their balance sheets.

Coindesk opined that this can’t happen as Bitcoin buyers aim to for exponential returns while central bankers aim for stable currency performance and returns that reflect positively on trade and commercial activity.

When such a scenario fails, and purchasing power suffers, central bankers will buy back sufficient amounts of currency through asset sales and bring its value back up again.

With Bitcoin’s price regularly fluctuating by 20-30 percent per week, it remains unreliable for future buy back options by central banks.

Coindesk did say that many central bankers have been exploring the idea of issuing central bank digital currencies or digital accounts for use by regular people.

“Unlike bitcoin, this form of money would be fixed in value – i.e. one unit of digital currency would be pegged at $1 banknote,” said Coindesk.

Coindesk predicts that Bitcoin IPOs, aka ICOs, despite raising hundreds of millions of dollars around the world in months, will fizzle in 2018, as regulators and authorities worldwide come down hard on fraudulent ICOs, because many ICOs sidestepped existing regulation in order to raise equity.

The crypto site also sees 2018 as the year major institutional players like asset managers, pension funds and other financial institutions such as payment providers, enter the digital assets space.