Bitcoin Investment
Bitcoin Investment – investing in Bitcoin. The cryptocurrency market is growing at a great rate, attracting more and more new investors.
The market offers to the investors a few |key tools for the investments: purchase of cryptocurrencies, crypto trading, investing in the ICO, or cryptocurrency hedge funds.
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Purchase of crypto currencies
The easiest way to invest in the cryptoeconomics is to purchase Bitcoin or other cryptocurrencies, and wait until they go up in price. Such a strategy is quite eligible, considering the explosive growth of Bitcoin and Altcoin.
According to the data of Coinmarketcap.com, in January 2016 Bitcoin exchange rate was $430.27 in comparison with $8147.51 as of November 23, 2017, which means that it became almost 19 times more expensive. Analysts predict that the cryptocurrency will keep on growing in 2018 and may reach the $14 000 mark.
Besides Bitcoin, a serious growth is shown by other cryptocurrencies, from the top ten by capitalization. In November, Bitcoin Cash and Dash grew rapidly (to $1565.58 and $570.58 correspondingly as of 11/23/2017), by having got “Ether” ahead ($421.12).
Exchange trading
Despite the long trend to growth, the cryptocurrency rates are very volatile in short-term time intervals: the exchange rate fluctuations may reach tens of percent.
It allows to do trading, playing on rise and fall. However, for serious results it is necessary to have a quit large amount of funds as well as devote a lot of time to the study of the peculiarities of the cryptocurrency market and exchange trading.
Besides that, the trades take all the risks connected with the unpredictability of some exchange processes.
Participation in the ICO
The investments in start-ups that come to the ICO (Initial coin offering) can potentially be very profitable. Such a possibility attracts many investors: since the beginning of the year, the amount of funds attracted by this method has exceeded $3 billion.
The main risk here lies in the fact that nearly all the start-ups at the ICO stage don’t have anything except an idea and, at best, some initial developments. Many of them have quite a wide planning horizon; the launch of many successful ICOs is planned for the middle of 2018. After this it will be possible to say exactly which projects have succeeded and would bring profit to their investors.
Besides that, already now the investors’ funds, invested in tokens, face danger on the part of hackers or unscrupulous businessmen themselves.
Meanwhile, the volatility of the tokens’ cost also allows investing in them with speculative intentions. However, for this, it is necessary to estimate the risks.
Cryptocurrency hedge funds
A relatively reliable investment option is to entrust your money to the professional investors, who will invest it in cryptocurrencies and tokens, in reliance on their experience. Such services are offered by the cryptocurrency hedge funds.
According to the experts’ estimations, as of the end of November 2017, the number of such funds exceeds 100, with three quarters of the total number appeared in 2017 on a wave of the cryptocurrencies’ growth and the agiotage related to it.
However, against the background of classic hedge funds, the cryptocurrency ones are currently at a loss: according to some data, they manage an amount of about $2.2 billion, while a hundred of the world’s largest hedge funds work with a capital of $ 1.65 trillion.
“Satoshi Cycle”
The analysts revealed a regularity in the development of the crypto currency market, which was named after Satoshi Nakamoto, the Bitcoin developer. The essence of this regularity, called “Satoshi cycle” lies in the fact that the growth of the cryptocurrencies’ exchange rate leads to an increased interest from the part of the society. New investors come to the market, heat it up – and, because of it, the rates grow further in their turn.
The experts believe that the sharp increase in the number of hedge funds.will become the main reason of the launch of new “Satoshi cycles” in the nearest perspective.
The risks of investing in crypto currencies
Regardless of the chosen tools and strategies of investing in crypto currencies, all the investments face the same risks. Among them, there is the development of standards for the market state regulation, the speculative side of the growth of manycryptocurrencies as well as criminal actions of hackers and businessmen in the sphere of blockchain.
See Also on BitcoinWiki
References
https://hightech.fm/2017/10/19/hedge-funds-top-100
https://cointelegraph.com/news/satoshi-cycle-interest-in-bitcoin-raises-price-which-raises-interest