Should you “HODL” Bitcoin?

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HODL

First and foremost, mastery of memes. The phrase “HODL,” which is originated from a typo for the word “hold” on any forum and has since become synonymous with cryptocurrency holding, is one of the most prominent terms in cryptocurrency.

In December 2017, investors had a good time as the price of Bitcoin skyrocketed and shattered previous highs. As bitcoin’s price has risen, experts have made wild forecasts about its future value. Three months later, their forecast for 2018 was more pessimistic. The cryptocurrency’s price has dropped by more than two-thirds from its December high, and it is now down around 47 percent for the year.

As a result, bitcoin has a reputation for dramatic price volatility, which investors have come to recognize as part of the risk when dealing with digital currency. If bitcoin were a business, the price volatility this year would be very concerning.

Because of bitcoin’s significant volatility, investors have been forced to rethink their position in the currency. Below is a summary of the bitcoin bull and bear scenarios. Is it a smart idea to save your money?

The Bitcoin Bear Market

A variety of factors are influencing the current price of bitcoin. Because of the ongoing stream of hacks and scandals emanating from the bitcoin ecosystem, the bitcoin ecosystem’s reputation as an illicit platform has not faded in the aftermath of these instances. The theft of $500 million in cryptocurrencies from the Japanese exchange Coincheck was the most prominent incident in 2019. The value of Bitcoin and other cryptocurrencies has fallen. Institutional money and bitcoin futures were intended to reduce volatility in the ecosystem.

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Regulators and economists from throughout the world have publicly condemned bitcoin, putting more pressure on it. As a result of this stance, governments are reluctant of granting legal protection to bitcoin.

Once-proud Bitcoin enthusiasts have now joined the Bitcoin bearish in limiting or eliminating the currency. Alphabet Inc.’s subsidiaries have all taken action, with Google (GOOG), Facebook Inc., Twitter Inc., and Reddit among the well-known brands that have restricted cryptocurrency advertising and effectively outlawed bitcoin payments at https://pattern-trader.app/.

Even the finest news is tinged with suspicion. Transaction fees for bitcoin, for example, have been cut, making it more accessible to the general public. However, as a result of this fall, there was a commensurate decrease in volume. The Lightning Network and Segregated Witness, which speed up the network, were intended to address Bitcoin’s scaling problem. As a result, they are no longer in command of any transactions.

Bull run

Patience is key to Bitcoin’s bull thesis. The price of bitcoin will climb again, according to the cryptocurrency’s pricing history.

Thomas Lee, the head of research at Fundstrat Global Advisors, is one of the most fervent supporters of this theory, and he recommends purchasing bitcoin. “Traditional stock investment discourages market timing.” If an investor misses the top ten days of the year, his or her annualized return falls to 5.4 percent (ex-10) from 9.2 percent (S&P 500). In other words, the argument for stock ownership is “the opportunity cost of missing out on the ten best days,” he claims. 1

According to him, removing the top ten days of each year from the calculation reduces bitcoin’s annual returns to 25%. According to Fundstrat data, if the top 10 day gains are excluded, bitcoin’s returns are actually negative. Lee forecasts a midyear price of $20,000 for bitcoin and a year-end price of $25,000 for the cryptocurrency.

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There appears to be some melting of stances on cryptocurrencies as a result of recent moves made by governments and regulatory entities. New bitcoin ETFs also help to increase the liquidity of the Bitcoin ecosystem by attracting new investors. The bitcoin network’s technological advances also point to a brighter future. The acceptance of this network by nodes is growing. Large platforms, such as Coinbase, are now utilizing SegWit technology. Those who feel that the price of bitcoin will continue to climb in the future may find that following these processes will help them avoid the problems that plagued the cryptocurrency during its price spike last year.

Conclusion

Based on previous trends, the market believes bitcoin’s price will continue to grow. Bears, on the other hand, point to the mounting dissatisfaction and controversy that has surrounded the original cryptocurrency.

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