The demand for this asset is something like I have never seen – a constant bias towards buy side flow maintained for long periods of the trading day from a high number of speculation traders/investors, even when the asset reaches significant milestones in terms of price level/action. Normally over this period I would expect a pause with the potential for a pullback lower, but this hasn’t materialised and the buy side flow continues.
The trajectory really is remarkable. We can fundamentally compare the asset to a prominent theme for 2017: disruptor companies. These companies are changing the landscape of how business is executed, using innovation to cut costs and becoming profitable mainly through technology but also circumnavigating the incumbent and existing market place.
Bitcoin is a classic example of this. A digital secure currency, secured through cryptography with a finite supply and made through a peer to peer exchange, and thus not subject to potential devaluation like standard fiat currencies from central bank quantative easing.
But is this a contradiction in terms of itself? Can the asset be described as truly successful? Certainly the meteoric price increase this year, now standing over 1400%, is amazingly impressive, but if we go back to the basics and look at this asset in terms of a currency, a viable form of exchange, can a viable form of monetary exchange really be used when the value changes by over 1400% in 1 year – in addition with intraday price volatility regularly moving into double digits? Given the current trend, I’m pretty sure Bitcoin will be $20,000 by the end of the year, but for it to be truly successful, Bitcoin will need to decide whether it’s a genuine means of exchange or just a digital store of value.
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