In 2017 Bitcoin was all the rage. Towards the end of the year, the addressable market for the hundreds of other tokens in the digital currency asset class attracted lots of buying along with Bitcoin. At the beginning of 2017, the price of Bitcoin was around $1000. By December, it had exploded to over $19,000. Many of the other cryptocurrencies went along for the bullish ride.
Throughout 2017, when each day’s high was the next day’s low, market participants flocked to the new asset class. Bitcoin became front page news which became a magnet for investors looking for the next great asset that would make their money grow at an accelerated pace.
Getting rich quick with little or no effort is the quest of many people, that is why so many people buy lotto tickets and why sales soar when the prize mounts to tens and hundreds of millions. People fall for Ponzi schemes and things that are “too good to be true” all the time. Even the most sophisticated investor can fall victim to markets that promise easy money and profits.
The warnings about Bitcoin and the pace of its ascent came from the some of the savviest investors. The Chairman of JP Morgan Chase called Bitcoin a bubble, and Warren Buffet, the Oracle of Omaha, said that it was an asset he would love to short over the medium and long-term. Despite the warnings, higher highs attracted new capital into the asset class which rose to over $800 billion by the end of 2017.
As the chart highlights, while Bitcoin was trading at $1,000 in early 2017, it was six cents in 2010. At the highs, last December, a $100 investment in 2010 grew to over $31.8 million.
2018 has been a year of reality for Bitcoin and the other tokens in the digital currency asset class.
As the shorter-term chart illustrates, the price had dropped back to just under the $7500 level as of July 19. Bitcoin went from higher lows and higher highs in 2017 to precisely the opposite in 2018. While the price has not come near the lows of last year, it traded to just under $5850 in late June.
While the trend in Bitcoin had turned lower, some market participants continue to believe that it will move to new heights in the coming months and years. Meanwhile, the price range has made Bitcoin a great candidate for trading in 2018.
From June 19 through July 19, Bitcoin traded in a range from around $5850 to $7500, or 28.2%. While some assets offer this type of price variance on a consistent basis, they are few and far between. Therefore, Bitcoin stands at the top of the heap when it comes to a liquid market that offers market participants incredible trading opportunities. Over the past 30 days, the price has been to the highs and lows of the range on multiple occasions, before it broke higher over recent sessions.
Bitcoin offers nimble and disciplined traders the type of volatility that creates lots of opportunities these days.