Bitcoin prices have skyrocketed in 2017. If you bought Bc in January, you would have doubled your money in just half a year.
This is leading to outrageous headlines such as “Bitcoin Price Will Hit $250,000 by 2020 If Seven-Year Trend Continues” and “Bitcoin Price Can Reach $1 Mln: CNBC’s Jim Cramer“. By the same logic espoused in those articles, bitcoin can double again in the next 6 months.
What could possibly go wrong? Everybody’s Doing It!
Needless to say, past performance is no indication of the future, and investing in Bitcoin is a risky enterprise. The point of this article’s title is to warn our readers not to buy into the bubble, and we’ll tell you exactly why:
Hedge Funds are Staying Away from Tempting Bitcoin Prices
Once Hedge Funds start embracing Bitcoin, start believing Bitcoin has a viable future. Why? Because the 1% wants to know their money is safe.
Hedge Funds are generally private investment partnerships. Hedge Fund investors often look to reduce volatility. Regulations require Hedge Fund members to be accredited investors capable of absorbing large amounts of risk. That’s why allocations of over $1 million are very common.Citing concerns over volatility, security, and perception, Louis Gargour explained why Hedge Funds are shying away from cryptocurrency investments.Click To Tweet
The Hedge Fund investors are notoriously demanding and difficult to please. They want to understand how their money is invested and believe the investment strategies are worthy of their fortunes.
But they don’t yet embrace cryptocurrencies – because it’s too risky! And who could blame them?
Security, Scandals, and Scams
Cryptocurrency scams exploit the general lack of knowledge. People just see the headlines and wonder how they can join in on the new Gold Rush and are easily exploited.
Who wouldn’t want to have hardware mining coins for you? All they need is your money. Case in point, Cloud Mining Ponzi schemes & scams such as Gawminers, Hashocean, Cointellect, Biteminer, Hashpoke, Hashinvest.
And even if you buy Bitcoins, who’s to say that your bitcoin bank or “vault” won’t disappear with your money? How can you trust that your bitcoins won’t disappear in a large transaction fraud? In other words, every step of the way is laced with risk.
Governmental or inter-governmental regulatory overview is the double-edged sword which can put an end to the “wild west” world that is cryptocurrency.
On the one hand, it has the benefit of instilling confidence (in the same way the Government currently insures your bank deposits up to a certain amount), but on the other hand, such regulations have the possibility to wipe out entire parts of the industry.
Those who have tried to stand in the way of the mighty United States Dollar don’t have the best survival chances, historically speaking. The power of a central bank as a reserve currency affects sovereign countries, so the current lack of regulation is an indicator that Bitcoin is not perceived as a big enough threat yet. That argument alone should make us pause.
But once regulations inevitably start rolling in, who will control them? China? Russia? Japan? Europe? The United States? The Commonwealth? Fracturing will not just take place on a technological level, but also on a national level. It is likely that countries will launch their own, regulated, legal tender cryptocurrency as a competitor to these Bitcoin prices.
When (and if) the United States would launch its legal tender, Federal Reserve backed cryptocurrency, and your existing bank will support it, then Bitcoin could be instantly relegated to fringe status.
Bitcoin Prices & Volatility Concerns
Cryptocurrency volatility is the risk of rapid and unpredictable changes. Bitcoin and other cryptocurrencies have some of the highest risks associated with them compared to a central bank or national currency, save perhaps, Zimbabwe.There is no guarantee that bitcoin can be used in the future for buying goods & services as legal tender.Click To Tweet
According to Profit.ro, the National Bank of Romania recently issued a warning against virtual currencies because of the very high volatility and low security relative to currencies issued by regulated transparent electronic currencies and central bank issued legal tender.
Smart investors buy low & sell high. Bitcoin prices are at an all-time high. Can it drop? The last time Bitcoin was at a peak, this happened:Between December 4th, 2013 and May 12th, 2014, Bitcoin dropped from $1,151 to $441. Click To Tweet
I think it’s in a bubble. I just don’t know when or how much it corrects. When everyone is bragging about how easy they are making $=bubble https://t.co/hTrV5DeWNd
— Mark Cuban (@mcuban) June 6, 2017
Buying bitcoin right now would mean you buy high. Edgy Labs agrees with Mark Cuban: when everyone is bragging about how easy it is to make money, beware!