Bitcoin is the largest and most widely used special type of currency. It is known as a cryptocurrency and can be used as a payment system, invented by a group of programmers under 10 years ago in 2008, before becoming open-source and usable for everyone. It is used as a one to one trading system between two parties without the use of any intermediate platform or conversion into real currencies and as a result many call it a virtual currency. Many people believe it to be the first ever cryptocurrency, however, several systems did exist before this system came to light. In actual fact it is the first ever “decentralised” digital currency and has the largest market share of any currency today.
The currency has attracted the attention of many traders for both long and short term investments. The volatile nature of the stock means that profits can be made quickly by many on CFD trading sites such as CMC markets, however, there are risks associated with it. It has not been around that long and has seen some rapid increase in price during some recent years. The following graphic shows how the price varied from 2013 to 2015.
This shows that the stock was very volatile and subject to a lot of change and this trend was repeated last year in 2016, where the price almost doubled throughout the course of the year. It can be seen from the trend that there can perhaps be some large profits to be made by traders, however timing is crucial, as ever with stock trading.
In terms of 2017, many predict a similar year to 2016, where the stock rose dramatically in price, however there is some scepticism around the subject and as the stock has only been around for a short period of time it is notoriously hard to predict. 2016 saw the system rise in terms of validity and became more widely accepted as a payment system, this means the outlook for 2017 looks good based on this fact alone however it does not necessarily tell the whole story. Although it is becoming a more widely accepted payment method across the world, with more and more interest coming from China, a particularly important market, the amount of venture capital investment is on the decline.
The predictions for 2016 were that the amount of investment would be much higher than it actually was and in fact it saw a $150 million decrease from 2015 to 2016, which means, following this trend, 2017 could see venture capital investments plummet even further, which could have a negative effect on the share price.
Despite this, a good indicator of a sure investment is always based on the volatility of the stock and as stated, traditionally, bitcoin has always been very volatile in nature, which can be seen in the image above. The image below shows a simplified summary between recent years for bitcoin:
It can clearly be seen, that although stock prices didn’t reach the heights of 2015, the stocks did rise a lot more steadily and a lot more consistently in 2016, which is always a good barometer of a good stock to buy or trade in.
There is now an increased demand for bitcoin which means it is predicted that 2017 will mean more of the same for the currency, as it will look to steadily rise, as it already has done at this early stage of the year. The size and the computing power and overall capability of the currency has also increased and investigations into rapid rises in previous years has meant that there is a better understanding of why volatility was there in the past and why volatility might not be a part of bitcoin’s future.
It has been suggested by many that the 2013 rise in particular came from a direct result of manipulation of the shares. This fraudulent behaviour has ceased since then and the steady and more predictable rise that has been observed in 2016 is a direct result of this and there does not appear to be a good chance of such fraudulent behaviour and manipulation being used in 2017, as the stock has come along way and matured since then.