Bitcoin continues to frustrate the many investors who came to the digital currency market in late 2017 with dreams of untold riches. In 2010, Bitcoin was trading as low as 6 cents, and by December 2017 the price reached a peak at over $19,000. While a handful of savvy investors made a fortune in the cryptocurrency, many bull market chasers came to Bitcoin late in the game.
In 2017, the digital currency traded in a range from just under $1000 to over nineteen times that level. Therefore, at $6437 on October 20 there are still lots of investors sitting on big profits in the asset. However, with Bitcoin trading at one-third the price it was at the end of last year more than a few investors regret not taking a huge profit that has turned into a smaller one with the deterioration of the price. Making a small fortune is always a good thing unless of course, it comes from a much larger one.
Bitcoin’s volatility over the past eight years has been unprecedented.
As the chart shows, the price spiked higher and corrected. Devotees of the digital currency asset class have opined that the current price action is just a period of consolidation in a bull market. Detractors are slapping themselves on the back after calling Bitcoin a bubble that put tulip bulbs in Holland in the 1600s to shame. Those are the committed bulls and bears in the asset class, and their debate is likely to continue with each claiming victory on significant moves that support their respective opinions. However, the most profitable approach to Bitcoin and other cryptocurrencies in 2018 has been a neutral stance when it comes to the path of least resistance for the long-term, but an aggressive approach to short-term trading opportunities.
As the chart of the price action in Bitcoin over the past three months illustrates, there have been two significant rallies and two impressive price corrections in the digital currency. Over the period, Bitcoin has traded from a low of $6143.30 to a high of $8397.63, a wide $2,254.33 range. Since July, the price band in Bitcoin is higher than twice the total price of the crypto at the start of 2017.
Since September 1, the range has narrowed, and Bitcoin has traded between $6177.23 to $7358.50, but it continued to contract in October. Meanwhile, the daily ups and downs in the price of Bitcoin provide traders with lots of opportunities to profit from buying and selling on a short-term basis by capturing price volatility.
Those who believe that Bitcoin is going to the moon and will make highs that are multiples of the level seen at the end of last year will continue to sit on their long positions like mother hens waiting for them to hatch. The crowd that believes in the biggest bubble every approach to Bitcoin will not be happy until the price moves below $1000 or to zero.
Price volatility is the fuel that builds the nest eggs for nimble traders with their fingers on the pulse of markets. Bitcoin continues to be a market that has provided the most opportunities for traders rather than investors in 2018.