Volatility, volatility, volatility. Traders certainly love it. But the volatility witnessed of late among many leading cryptocurrencies – including the “Big Daddy” of them all in the shape of Bitcoin as well as Ethereum – has been a “double-edged sword,” according to some pundits. Price swings can occur dramatically and result in big profits, should you catch it right.
Equally, significant losses can be sustained should your timing be all awry, there is negative newsflow around the crypto space and/or particular digital currencies.
Bitcoin’s Halcyon Days?
One might say you pay your money and take your chances in the “Wild West” of crypto land. More succinctly, caveat emptor (buyer beware). And, as Jordan Hiscott, chief trader at ayondo markets, a brokerage in London and part of a global fintech group with subsidiaries authorized and regulated in the U.K. (Financial Conduct Authority) and Germany (BaFin), in a note last Tuesday stated: “Certainly the halcyon days of performance gains [for Bitcoin] from 2017 seem long gone.”
Bitcoin moved lower early last week (March 27) and was trading at around the $7,900 mark. However, this was in stark contrast to the level of $13,275 at the start of 2018. Hiscott’s view expressed at the time in late March was that the situation around the current soggy price level could persist for “at least six months.”
He added: “My theory is based around the situation regarding the liquidation of the Mt. Gox exchange that was based in Shibuya, Tokyo, and the appointed trustee to handle the bankruptcy. Colloquially, this individual is known at the “Tokyo Whale,” and having already sold around $400 million worth of both Bitcoin and Bitcoin Cash, he is likely the main catalyst for this year’s move down.”
Interestingly, there still remains around three times that amount of Bitcoin to potentially to hit the market. “With this kind of volume yet to surface, in my view, prices on Bitcoin will remain depressed until this situation has been resolved,” ayondo’s Hiscott posited.
The wild run on the crypto scene starting from late last year may have created a few sob stories for new investors, as those who bought in during the all-time highs are likely to have incurred losses due to February’s massive correction. Some might even be ruing the day they ever decided to dive in and invest.
In fact, recent statistics indicate that most people who got into bed with and invested in Bitcoin did so at a significantly higher price than the current market price, which is now well below the $10,000 market. This is a pretty remarkable turnaround.
Siim Õunap, an FX and crypto trader, commenting on the current landscape, said: “The majority of people no longer see cryptocurrencies as a way to earn a quick buck anymore. People are now starting to invest because they can see the value in the long run.”
The Estonian, who is also chief operating officer of the Savii Digital blockchain agency and divides his time between London and Tallinn, added: “Devoted users, and not speculators, are what emerging blockchain technologies need to become mainstream.”
Having reached just slightly north of $19,000 a pop on December 17, 2017, in a something of a feeding frenzy from the month before (seeing the Bitcoin’s value almost quadruple from $5,857.32 on 12 November), Bitcoin’s price retreated and has fallen back to around $6,500 as of today (April 1). And, that’s no joke. Since the peak it equates to a decline of 65% in a matter of fifteen weeks.
Bitcoin was not alone in seeing a substantial price correction from its peak. Ethereum’s price, which was standing at around $366 as of April 1, is down from over $1,330 – the currency’s peak – reached on January 14 this year. The picture of declining prices from highs has been a similar picture for Bitcoin Cash, Litecoin and Ripple (see table below).
Top Cryptocurrencies: Trading Prices
Dec 17, 2017 April 1, 2018
Source: CoinDesk Inc. Prices in US dollars as of April 1, 2018, 15.20 UTC.