Bitcoin’s Wild January Ride – Bitcoin Forks May Help Smooth Out Volatility

Bitcoin's Wild January Ride - Bitcoin Forks May Help Smooth Out Volatility

Bitcoin dipped and bobbed throughout the first few weeks of 2018, ultimately slipping around 20 percent year-to-date at the time of writing. Bitcoin’s losses alone sucked nearly $50 billion from crypto markets year-to-date, and none of the other major cryptocurrencies have fared much better.

Red may be a lucky color for some, but usually you don’t want to see it all over the financial markets. Down days on the market are frustrating, but they don’t always signify that the bulls have turned into bears. Call me superstitious, but maybe all the red in crypto markets recently is actually a positive omen for 2018.

 

Bitcoin is Stabilizing – Kind Of

In January 2015, Bitcoin dropped to a low of $184. It finished the year at well over $400. January 2016 also saw the cryptocurrency’s annual low at $366 before Bitcoin finished the year at an impressive $963. This trend repeated again in January 2017 and, perhaps, is also occurring now.

The data speaks for itself, but why exactly Bitcoin has dipped to a low in January so consistently in recent years is anyone’s guess. Perhaps people were holding on to their crypto assets until the next year for tax purposes. Maybe assets were cashed out across the board to pay credit card bills from the holidays. Who knows? However, the fact that Bitcoin trading is following some kind of trend is encouraging. Hopefully, the virtual currency is finding its stabile trading range.

 

Hard Forks May Suppress Price Shocks

The downward trend in crypto markets be a healthy sign of gradual deflation, and 2018 may finally be the year cryptocurrencies break into mainstream retail and consumer finance. However, before this is possible, software developers need to work out some of Bitcoin’s major kinks.

Over the last few years, thousands of new coins have been launched onto the marketplace. Some of them – like Ether and Ripple – have contributed real value to the market. Others were just a quick way for some smart software developers to make a few (million) bucks. But what they all had in common was that they were increasing competition in an already volatile market.

Rather than trying to pick a winner from among the crowded altcoin marketplace, Bitcoin investors can benefit from updates to the digital currency without having to risk their hard-earned coins. Anyone holding Bitcoin in a compatible wallet or exchange can simply claim a forked coin when they choose, usually at a 1-to-1 payout.

If 2017 was the year of the ICO, 2018 is going to be the year of the forks. Unlike ICOs, forks do not create greater competition in the already over-crowded and speculative coin markets. Rather, they offer the potential for improvement to the world’s most trusted cryptocurrency. Although Bitcoin started the year with some turbulence, the stabilizing market effect of upcoming hard forks may decrease overall volatility.

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