Insights on the Future of Cryptocurrency as 2018 Draws to an End

The idea of cryptocurrencies (digital currencies that are cryptographically encrypted) has been moving around in the academic circles since the 1970s. The idea, however, took on form and shape with the arrival of Bitcoin in 2009. Over the last 9 years, Bitcoin has grown on to be disruptive in the fields of monetary policy, finance, economics, and e-commerce – and it has spawned an industry of more than 2,000 coins, tokens, and altcoins in what is being generally referred to as the cryptocurrency market.

 

Future of Cryptocurrency

Interestingly, the cryptocurrency market peaked last year when the price of Bitcoin rallied more than 1400% to $19,000 and the market cap of the cryptocurrency market skyrocketed to almost $700B. However, in the year-to-date period, the trading price of Bitcoin has crashed about 53% to about $6,500 and the market cap of the crypto market has declined more than 56% to $209B.

Now, no one knows for sure how cryptocurrencies will fare going forward. There’s an ongoing debate on whether cryptocurrencies will become the future of money or whether the idea will eventually fade into oblivion if it is unable to build up a critical mass. This piece provides insights into how the fate of cryptocurrencies might pan out going forward.

Bitcoin is still the king of crypto

Bitcoin is still the biggest and most popular cryptocurrency in the market; in fact, the first interaction that most people have with cryptocurrency and blockchain technology can be traced to Bitcoin. Bitcoin currently has a dominance of about 53% of the cryptocurrency market; hence, its price often determines how other coins and the general cryptocurrency market will fare. Going forward, the realities of the market suggests that the dominance of Bitcoin might not increase but it will most likely remain unchallenged. Of course, some coins are correlated to Bitcoin and some other coins have inverse relationship with Bitcoin; nonetheless, smart cryptocurrency traders and investors will do well to pay attention to Bitcoin in formulating strategies about how they want to play other coins.

Massive changes are coming to cryptocurrency exchanges

Cryptocurrencies exchanges serve the dual function of facilitating the exchange, buying, selling, and trading of cryptocurrencies – they are a large cog in the wheel of the cryptocurrency industry. Ironically, most of the cryptocurrency exchanges in the market are centralized in nature—in sharp contrast to the decentralized nature of cryptocurrencies and blockchain technology. The centralized nature of these exchanges has made them prone to data breaches, hacks, and outright heists. Going forward, there will be growing demand for DEX Exchanges, which are decentralized in nature and maintain a public ledger of transactions through consensus.

The volatility of the markets won’t die anytime soon

Cryptocurrencies are inherently volatile, and their volatility is one of the reasons fortunes are made (and lost) in the market. One of the main reasons behind the volatility in cryptocurrencies are that they are still in the early adoption phase and there’s a huge upside potential if they could break out into the mass market. However, every bit of news about cryptocurrencies will either hint at the possibility of stunted growth (and the prices fall) or hint at the possibility of reaching the mass market (and prices rise). The volatility in the crypto markets will continue to be felt since news moves the market and the volatility won’t likely stop until there’s mass-market momentum.

Institutional investors will bring more funds and insist on sanity in the market

In the early day s of cryptocurrency, traditional financial institution and government financial agencies were quick to denounce, criticize, and vilify cryptocurrency enthusiasts. The crypto market has however proven to be incredibly adept and resilient in the face of these attacks. Now, the perception of traditional financial institutions about cryptocurrency is changing. Going forward, stakeholders can expect to see an increasing inflow of funds from Wall Street into the crypto market as crypto funds, ETFs, and other investment vehicles debut. However, the inflow of Wall Street will also require increased transparency, accountability, and regulations.


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Author: Guest Author
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Bitcoin Reaches Record-Low Volatility

It’s an open secret that trading in bitcoin has become more difficult in recent months than it once was. Traders rely on volatility to make their money, and with less volatility, there are fewer opportunities to trade. For long-term holders and users of bitcoin, however, it’s a very different story, and low volatility is generally seen as a sign the bitcoin market is maturing.

According to Gil Luria, research director at wealth management firm D.A. Davidson & Co., the recently stable bitcoin prices means that there is less speculation in the bitcoin economy.
“When speculators are involved, they drive unusually high volumes as well as volatility by trading the asset with high frequency. As speculator involvement is diminished, volumes go down and volatility goes down as well,” Luria told Bloomberg.

The same sentiment was also echoed by Mike McGlone, commodity strategist at Bloomberg Intelligence, explaining that bitcoin is now exhibiting signs of a “maturing market, so volatility should continue to decline.”
“When you have a new market, it will be highly volatile until it establishes itself. There are more participants, more derivatives, more ways of trading, hedging and arbitraging,” McGlone said.

Judging from the data, it appears the experts are right that both trading volume and volatility is down. Although most notably for bitcoin, the data confirms that the same is also true for many other cryptocurrencies.

The unusually low volatility in bitcoin is confirmed by a technical indicator known as the Average True Range (ATR) indicator, as seen in the bottom of the chart below. Looking on a day-by-day basis, volatility in the bitcoin market is now down to levels not seen since July 2017, before the huge run-up in prices seen later that year.

Bitcoin’s Next Move
Although volatility may be low at the moment, bitcoin’s price chart looks like it is about to break-out from a massive chart pattern that has been forming since the beginning of this year.

Judging from the pattern seen above, with lower highs but a floor around the USD 6,000 mark, it appears that bitcoin is about to face another battle between bulls and bears that will determine its next move.

As we have seen throughout 2018, the selling pressure has been heavy on bitcoin, but buyers have consistently shown up at USD 6,000 to support the market. Over time, sellers have become exhausted as they have not been able to drive the price further down, and we have seen lower volatility as a result. The next few weeks may give us an indication of which side is stronger in the fourth quarter of 2018.

Meanwhile, a new informal poll indicated that the usually very cautious Wall Street investors are now overwhelmingly calling a bottom in the bitcoin market. Twitter users, however, are still skeptical, with a majority saying bitcoin still has room to fall.
In either case, the next time you read a price prediction from an expert trader, you should probably take it with a large grain of salt.


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Author: Fredrik Vold
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A New Study Suggests Male Investors Are Prone To Panic, While Women Play It Smart

Ample economic literature suggests there are real differences between the sexes when it comes to trading and investing. The key takeaway from the research, as Matt Phillips once explained, is that pretty much everything on Earth, including financial markets, would run better if women were in charge.

The conclusion is grounded in repeated findings that women tend to have lower financial risk tolerance than men and make smarter, more calculated decisions about their investments. What’s more, women tend to be less competitive than men, who are disposed to competing even when they’re more likely to lose.

Though performance isn’t much different by gender in the professional investing world (especially when comparing US fund managers), new research from Stash, an investing app, suggests that at the individual-investor level, women may be wiser investors than men. Moreover, the findings dismantle stereotypes about the appetite women have for risk.

Analyzing self-reported responses from 640,000 users with a personal investment account, Stash identified various measures by which women are smarter, more reliable investors. The sample group was approximately one-third women and two-thirds men. (Stash notes that a majority of its users are male.)

Stash’s analysis suggests that female investors are more likely than men to think of themselves as risk-averse. However, their actual investment behavior counters this trope.

When users sign up for Stash, they’re asked whether they identify as low, medium, or high risk when it comes to investing their money. Among the sample group, nearly 90% of female Stash users identified a low or medium risk tolerance when they opened their account, as compared to 75% of men. “This means that female Stash users perceive themselves as less willing to make riskier investments, opting for less volatile stocks and ETFs—they want safer investments, in other words,” Alexandra Phelan, the Stash data scientist who led this study, tells Quartz.

The data, however, tell a different story: Both men and women hold an average of five different investments in their Stash portfolio, and roughly 50% of women have invested in higher-risk investments, just as men have. Similarly, both men and women have a roughly 85% to 15% portfolio breakdown of ETFs and stocks respectively.

“While female users are more likely to self-identify as conservative, in practice, the number of men and women who are willing to invest in riskier investments is nearly identical,” says Phelan.

But Stash’s analysis does find that male and female Stash users behave quite differently when markets become volatile. Stash examined its users’ behavior on two especially volatile days for markets in 2018—Feb. 5 and Feb. 8, when major stock indexes suffered big losses, moving into what Stash defines as correction territory. On those days, the men panicked: Men who use Stash were 87% more likely than women, on average, to sell an investment. That behavior continued through the following week, with the men remaining 76% more likely than the women to sell an investment.

“It turns out women acted more sensibly on turbulent days,” Stash concludes in its report. ”By selling after a market drop, men effectively locked in their losses. The market has since recovered.”

Of course, this is one study by one company. Many men are excellent, level-headed investors. Many women are not. But if anything, these findings ought to chip away at the confidence gap that keeps many women from investing in the first place.


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Author: Leah Fessler
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What cryptocurrency could mean for your business

Interest in cryptocurrency among consumers, businesses and everyday investors skyrocketed in 2017 as the price of Bitcoin rose from under $1,000 per coin to nearly $20,000 over the course of 12 months. Of course, today the price has leveled off to a degree, and a host of new blockchain-based currencieshave been launched and continue to be developed, some with very specific transactional and investment goals, including the promotion of social causes.

As cryptocurrencies evolve and their number expands, online retailers both large and small in the U.S. and globally are left to evaluate whether they should jump onboard this semi-regulated digital train, and if so, how.

At the same time, other kinds of organizations, from financial management businesses to non-profit fundraising groups, are examining the best way to integrate cryptocurrency use into their operational strategies. Individual investors, as well as businesses aiming to invest their assets, are also taking a closer look.

How can you determine if your company should embrace this new frontier? Perhaps the best way to start is by examining how cryptocurrency might impact your business’s bottom line. Here is a closer look at some key areas where digital currencies offer potential benefits and risks.

Reduced transaction fees

If your company is contemplating accepting cryptocurrencies (either one particular currency or multiple forms) in exchange for your products or services, one potential bottom line benefit is that there will generally be no direct processing fees. Unlike with credit card transactions, where banks serve as intermediaries and charge a fee, cryptocurrencies are decentralized, which means that transactions have no third-party involvement.

Coins and tokens are not developed or controlled by a single authority, like fiat money that is issued by a sovereign government, but instead work directly through blockchain technology. If you are a merchant selling online, you will, however, likely be charged a small flat fee for your merchant wallet account or accounts, like BitPay or CoinPayments, which allow you to accept certain cryptocurrencies.

Faster payment

Cryptocurrency transactions happen almost immediately, unlike credit card payments that may take days to clear. As a result, you will have access to the coin payments in minutes. Sales are also final, which means that charges cannot be negated after the fact. All of this translates into more financial security for your business.

Improved customer access

With more consumers and business customers showing interest in cryptocurrency, offering coin payment options may increase your audience of buyers. Certainly, because digital currency is non-governmental, it is by definition international, which means that your business could see an increase in global clientele, especially as use grows. Cryptocurrency of course has no exchange rates or fees across borders, and so is theoretically the perfect way to conduct global business.

Currently, fewer B2B organizations, including professional service companies, and more B2C businesses are accepting or paying with cryptocurrency, but this trend is likely to change as the marketplace evolves. Ultimately, by simply accepting cryptocurrency payments, you may boost your bottom line as you attract new customers.

Volatility in value

Cryptocurrencies are notoriously volatile, which makes them attractive to investors seeking high reward through elevated risk, but also potentially dangerous for businesses that accept them as payment. Imagine if a customer pays you in Bitcoin, and then after the transaction the value crashes – which it has been known to do across the hundreds of coins now used.

For many merchants, the volatility issue is muted by the fact that merchant wallet accounts offer immediate conversion to fiat money. Unless a crash occurs within the confines a few seconds between a payment being made and accepted, most companies are protected from volatility. For this reason, most do in fact choose to automatically convert payments to fiat. Companies that keep payments and revenue in the form of cryptocurrency are essentially taking the risk that comes with coin investment.

Lack of regulation

Cryptocurrency is still relatively new, and as a result, governments around the world have issued limited, and differing regulations. Some nations, especially the small country of Lichtenstein, have aggressively moved to embrace and promote cryptocurrency with financial incentives designed to build stability and regulatory assurance for those that use and invest in coin.

But overall, a general lack of regulations, including here in the U.S, can mean uncertainty for business that deal in cryptocurrency, including uncertainty about what kinds of taxes and investment limitations may be imposed in the future.

Taxation and accounting challenges

Companies that accept or invest in cryptocurrency will need to make the effort to understand the changing regulatory environment, and will also need to factor in the tax and accounting tasks that will be required of them.

In 2014, the IRS released IRS Notice 2014-21, which declared that for U.S. income tax purposes, a cryptocurrency is property and not a currency. Depending on the facts, that means the character of the cryptocurrency could be business property, investment property, or other property. Therefore, the general U.S. tax principles that apply to any property transaction should be applied to exchanges of cryptocurrencies.

Cryptocurrencies held for investment and sold for a gain are subject to short-term or long-term capital gains tax. Conversely, those investment-held cryptocurrencies sold for a loss are able to utilize a capital loss. The IRS notice does not, however, resolve all issues related to reporting requirements or taxation. Some of the unresolved issues include foreign account reporting, cryptocurrency as “like-kind” exchanges, and taxation of crypto-forks.

To keep track of the complex and evolving regulatory environment, and to understand the full range of financial implications of using, accepting or investing in cryptocurrency, you would be well-advised to start by talking to your financial and tax advisors today.


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Author: Tony Argiz and Erick Wendelken
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A Look Into the Future of Cryptocurrencies – 3 Predictions for the Cryptocurrency Market

As regulation of cryptocurrencies rises, investors’ faith in them will rise, too.

It’s less than a decade in, and cryptocurrency has already made a statement in the financial sector. Seemingly out of nowhere, this currency has managed to get people’s attention and, often, their admiration. And it’s already affecting some aspects of the general public’s lives, including entrepreneurship.

Adopting cryptocurrency and its underlying blockchain technology to work with already existing systems, of course, has posed challenges. A recent example occurred when the technology infrastructure company Stripe took a stab at incorporating a bitcoin payment option. Unfortunately, the result wasn’t a success.

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It turned out that the speed in processing bitcoin transactions turned off clients. In a blog post this past January, Stripe’s project manager, Tom Karlo, said his company’s customers rejected the cryptocurrency option because of confirmation lags, high fees and a disconnect between transactions and the fluctuations of the currency’s value.

In fact, digital cryptocurrency overall has had its fair share of failures. But despite them, many people still believe cryptocurrency has a bright future. In an interview, Kevin Murcko, CEO of CoinMetro, for instance, firmly stated his belief that cryptocurrencies are still developing and that there is more we’ll see in the cryptocurrency space.

“The cryptocurrency and blockchain industries are works in progress,” Murcko said. “Look at Bitcoin, for example; it’s not the way it was almost a decade ago. Aside from the change in value, it’s operating in different terrains. It’s receiving more feedback in terms of problems that provide areas for growth, development and innovation.”

True, cryptocurrency has had its ups and downs. However, the following trends of the cryptocurrency market give us a somewhat intelligent guess as to what we can expect in the future:

1. Cryptocurrencies will receive more patronage from institutional investors.

Given that more and more governments are looking into the regulation of cryptocurrencies, investors are feeling more comfortable about putting their funds into them.

With added regulation, institutional investors will be able to breathe easier and have less anxiety about the uncertainty of the cryptocurrency market. In fact, more investors are seeing cryptocurrencies as a viable asset because of their attractive returns: In December 2017 bitcoin hit a record high of almost $20,000 for one tcoin. Although the price has gone down since then, experts predict that Bitcoin’s value could actually go higher than that 2017 figure.

Billionaire investor Tim Draper boldly predicted, for example, that Bitcoin would achieve a value of $250,000 per coin by 2022.

However, any rise in that direction will be a gradual one. While some institutional investors are investing in cryptocurrencies, others are diligently watching the market. Therefore, the introduction and implementation of regulations may attract some of those watchers to jump in.

2. Why cryptocurrencies are being regulated

Lack of security has long been one of the biggest concerns for traders. In fact, a survey conducted by Encrybit, a cryptocurrency exchange platform, revealed that 40 percent of the participants polled saw security as a major concern.

According to the Securities Exchange Commission, cryptocurrency exchanges overall remain unregulated. This is in contrast to cryptocurrency’s conventional currencies counterparts, which are regulated by the central banks of their respective countries.

At times, hackers and cybercriminals have already taken advantage of the lack of cryptocurrency regulation and made trading in these currencies unsafe for investors.

However, attempts are in progress to regulate cryptocurrency in the international arena. For example, at the G20 summit in Argentina, directives were made for global regulations.

In a recent conversation I had about the future of the blockchain industry with Ahmed Khawanky, the CMO of IngotCoin, Khawanky emphasized the need to regulate the cryptocurrency market as a way to maintain security.

“When you try to push something new to the market,” Khawanky said, “there’s a need to win the trust of the people. People won’t trust something they don’t know or like. Therefore, ensuring security is the heart of the overall success of the blockchain technology.”

3. Cryptocurrencies won’t stop being volatile.

Despite the measures to ensure stability in the cryptocurrency market, it’s still a struggle to stop or at least reduce cryptocurrencies’ volatility. There are still so many factors keeping them volatile. These include: the currencies’ lack of intrinsic value, the lack of institutional capital, the implementation of regulations and thin-order books, among other factors.

Although regulation of the currency and their markets will help lower volatility, that alone will not be enough to make a considerable difference in cryptocurrencies’ volatile nature.

But, as cryptocurrency trading becomes more popular, we should be seeing an ebb and flow of volatility. While some people will benefit from the sudden increases those ebbs and flows bring to cryptocurrencies’ value, we should not overrule the possibility of a sudden crash as well.

In short, cryptocurrencies won’t stop being volatile. And that’s something any investor should plan for.



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Author: Toby Nwazor
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Volatility: The Necessary Evil Of Cryptocurrency And How To Handle It

Part of what has cemented cryptocurrencies on the map since they exploded into the mainstream investor market has been their volatility. Investors flooded to the likes of Bitcoin when, through November and December 2018, the value of the cryptocurrency increased in value exponentially.

However, such volatility is a two-edged sword, and the cryptocurrency market has shown that in 2018 with Bitcoin’s price shedding more than 50 percent at times from its year end price of $13,000.

The cryptocurrency market has also felt the ill effects of Bitcoin’s volatility because as a result of the price drops, Bitcoin’s trading volume, and even interest in the digital currency realm also decreases. The danger is that volatility can cause a large exodus of investors to occur which severely dents the hopes of other cryptocurrencies gaining mass adoption status.

Volatility should be at the center of attention if there is to be a future in which crypto is used widely in day-to-day instances.

However, it requires a lot of bravery, and some tactical know-how, to successfully navigate the lows, in order to keep oneself safe, and sane, as well as contribute positively to a burgeoning crypto economy.

Why volatility is important, but deadly

There is a lot to be said for the role that volatility played in helping cryptocurrencies reach the mainstream market.

Cryptocurrencies, and Bitcoin in particular, only made it into the mainstream media stream as a tool of the dark web when the infamous Silk Road was shut down. Back then, it was far from being considered a good investment for Wall Street types, but they soon joined the party.

Suddenly, banks, the thought leaders of banking and financial institutions all had an opinion on Bitcoin – many of them thought it was a fad, or even rat poison and far too volatile to take seriously, but conversations about Bitcoin were starting to be held in investment circles.

The Chicago Board Options Exchange (CBOE), and the Chicago Mercantile Exchange (CME) introduced Bitcoin futures trading on the 18th and 10th of December 2018 respectively. Goldman Sachs and Barclays are rumoured to be looking into crypto trading desks, and people could not get enough of this crazy asset that could double in price in a matter of weeks.

Stories of Bitcoin billionaires and overnight millionaires cropped up, and the individual investors flooded to be a part of the massive wave of Bitcoin mania.

This is why volatility was so important in establishing cryptocurrencies as a potential asset that could also be adopted as a currency in mainstream society. However, this same volatility is also what could kill that goal.

Itai Cohen, CEO of Homelend, a mortgage crowdfunding platform has noted to Cointelegraph that within their scope of property and mortgaging, they see volatility as something that drives investors away from the cryptocurrency market and into more stable investments such as the housing market. Their aim is to try and transcend the cautious housing investors while catering to a new, bolder investor who embraces this volatility.

“The high volatility of crypto-assets is the result of investors’ reliance on the so called ‘adoption syndrome’ – where the perception of an asset’s value is mostly based on expectations about its adoption by the community.”

“I believe that this is a key factor, more so because perceptions are much more volatile for a digital asset than for ‘real-world’ assets like gold, real estate, corporate profits or government backed currencies. In other words, there is a big gap between the physical world and the digital one.

“The mortgage industry is a perfect example of an industry that seems to be helping bridge the gaps, same as the real estate industry or any other industry that has a foothold in the ‘real’ world.”

The problem is, if people enter crypto when the market is at its most Bullish, profiting off the upward volatility, they need to be strong enough to stomach it at its most Bearish, and the volatility takes a big down swing.

How To Handle Volatility

Handling volatility is nothing new for institutionalized investors. Assets, stocks, bonds, and even forex is prone to swings, but the problem is that cryptocurrency volatility is off the charts.

Additionally, investors in cryptocurrency are often new to the game and have not experienced the range of swings before – watching their money both grow, and shrink substantially by the hour.

As the stock market having been around far longer than the cryptocurrency one, it is a good place to begin. Their tips in handling these sickening lows, and highs, are relevant and can be carried across to crypto trading.

Just like in the cryptocurrency space, there are long term investments and short term investments in the stock market. Roger Ma, founder at Lifelaidout, a certified financial planning company in New York, explained how, in stocks, it is important to not forget about your time horizon:

“Investing in stocks rewards you in the long term. These day-to-day changes in the market shouldn’t affect you.”

This reflects very much in the same vein as the so-called ‘Hodl’ strategy for cryptocurrencies. Essentially, the strategy says that there is no need to let ‘day-to-day changes affect you’ rather just hold onto your cryptocurrency to avoid the volatility altogether.

Ma also mentions another strategy which shares similarities with cryptocurrency – dollar cost averaging. Under this strategy, you buy an investment on a fixed schedule. This investment strategy essentially stops you from making rash moves into, and out of, the marketplace.

“As long as you have a good plan in place and have thought about the time horizons where you need the money, then the slightly small moves in the market shouldn’t matter to you.”

The Dow Jones has been known for its big drops, even over the course of just one day. Scott Hanson, founder and senior partner at Hanson McClain Advisors, made an important note on these kinds of drops.

“A 250-point drop for the Dow today is only about a one percent decline. But that same drop when the Dow was at 10,000 would have been a 2.5 percent fall.”

This basically speaks out about the bigger picture, and how important it is to zoom out of the charts. For Bitcoin, just six months ago, in October 2017, people were celebrating wildly that Bitcoin had broken the $6,000 mark. However, a few times already this year, people were panicking that Bitcoin would hit $6,000.

 

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Safe Havens

There are times however, when even seasoned investors in crypto feel the pinch and want to either take profit, or a high, and escape the market. But, escaping the market for an investor is difficult if that money is designated for assets.

Many have seen value in diversifying their portfolios, not only across cryptocurrencies, but also hedging their bets with some more stable assets, primarily gold.

Gold

Gold is an asset that is almost synonymous with stability, and, it has a long running history with cryptocurrency as its antithesis. There have been times where it is apparent that gold and cryptocurrencies have inverse relationships with the precious metal speaking in times of crypto lows.

Daniel Marburger, director of Europe-based online gold dealer Coin Invest said that gold coin sales increased fivefold on Jan.16, the same time cryptocurrencies were crashing.

“[Tuesday] was a hell of a crazy day,” Marburger said, adding that “emails and phones did not stand still with customers asking how they could turn their crypto into gold.”

Even before cryptocurrencies, gold was known to spike in times of stock market volatility as its value tends not to move in line with other assets such as equities or property.

Cash

Cash is another safehaven that crypto investors easily flock to when the cryptocurrency market takes a dive, as it is as simple as selling the digital currency for something that is at least usable in day-to-day life.

The issue with turning digital currency to cash is that the value of cash is constantly shifting but slowly, losing value, and as an investable asset, it really is not a good bet.

Similarly, as a safe haven for cryptocurrency the problem is that a dreaded cycle of selling low and buying high can develop as investors sell their assets in times of lows, and buy them back when the market is booming again, and probably, over valued.

The Value of a Dollar

Image source: U.S Bureau of Labour Statistics

Bonds

Bonds issued by governments are generally perceived as safe haven investments because the general view is that countries are often more financially secure than companies, and more stable than cryptocurrency. However, if the bond issuer can’t meet interest payments or repay the capital when it’s due, you could lose your whole investment, and it has happened before, even in economies as big as China’s.

All of these safe havens primarily have ways in which a crypto investor can escape the volatility of the market and protect their assets from falling to far. However, the primary issue is that they are taking their investment totally out of the crypto economy, and with the volatility, it is often hard to get back in, and profit, when the markets are green.

Guy Melamed, CEO of Zeex, a company that tries to mitigate crypto volatility by turning them into things such as gift cards, reiterates the point that by leaving the crypto market totally in search of a safe haven means that there is a gamble about getting back in when the time is right.

“Even though top cryptocurrencies such as Bitcoin and Ethereum have made tremendous progress within the last few years, the latest dips in the market have had many investors understandably looking for safe havens where they can park their wealth without dropping out of the crypto market.”

“Many will turn to conventional safe havens like gold, stable-coins and exchange-traded funds. But it’s hard to buy low when the whole herd is stampeding in the same direction. What we’ve found in our work, is that inflation tracking crypto gift cards can be stable because they are linked to inflation and not speculation.”

A duty to weather the storm

There is evidence to suggest the volatility of Bitcoin is lessening, that the wild swings are not as wild, and that they are in fact getting more manageable over time. This has a lot to do with the rise in adoption and the distribution of Bitcoin across a vast and varied market.

On the other side of things, volatility is also sometimes prized. Arthur Hayes, the CEO of BitMEX, a Bitcoin mercantile exchange, trades in volatility and sees it as important to the space.

“I am a volatility trader at the end of the day,” Hayes said. “We make our money if it is volatile. If it goes up or it goes down, if you have Bill Gates calling it a fraud, then short it – I don’t care. Or, if you think it is going to be one million dollars in a few months, great! Buy it, still don’t care, we just match trades.”

But, according to Daniele Bernardi, the founder of the PHI Token and researcher on cryptocurrencies, volatility is lessening, and it is because not everyone is after that ‘three-digit return’.

“The extreme volatility that characterizes the crypto world today is clearly linked to the very high yields they have generated in recent years. If we want the crypto to continue to offer triple-digit returns as an asset class, it is inevitable that volatility must remain high. Even if the same is also linked to liquidity, for which the crypto community will inevitably grow the more we will mitigate the returns to the volatility, Bernardi told Cointelegraph.”

“This is already happening, because the volatility of Bitcoin in the first years of life was more than 300 percent per year, while now it varies between 50 and 100 percent per year. Currently there are no asset classes that have similar volatility except for the volatility of the VIX index which is a volatility indicator in turn.”

Volatility

It requires those who are invested in Bitcoin, and other cryptocurrencies, to stick with it and work through the volatility in order for the digital currencies to survive, and thrive.

Mainstream adoption has kicked off in earnest, but it requires a lot of hard work from those who are in the market now, to stay in it, and to ride out this storm. Once the volatility is under control, a new wave of adoption can surely kick off.


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Author: Darryn Pollock         
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