Finance

3 Predictions on the Future of Cryptocurrency

The financial sector is seeing some technological changes, with cryptocurrency being one of them. Bitcoin, especially, has been in the news quite often because of the incredible increase in share value in 2017. However, Bitcoin wasn’t the only cryptocurrency to have a great year, because there are hundreds more on the market that make great investment opportunities. For some people, it is odd that a currency that can’t be held can gain value. It’s not so much about being able to hold the currency like a dollar bill but more about the blockchain technology that made cryptocurrency possible.

Blockchain technology is complex, and some investors may not have a solid understanding of it. All some investors know is that investing in cryptocurrency can produce great returns.

If you are wondering if this is a good investment opportunity for you, evaluating the following cryptocurrency predictions can help you make up your mind.

Prediction 1: Bitcoin Will Keep Growing

Bitcoin has seen quite the roller-coaster ride recently. Most of the ups and downs have been due to growing pains that new investment opportunities go through. However, experts aren’t letting the downs outweigh the ups since Bitcoin and other cryptocurrencies are working to find their footing in the market. The beginnings can be rough for any investment, but Bitcoin is one that always seems to bounce back. To back this up, the transaction volume of Bitcoin increased 100 times from the beginning to the end of 2017.

Obviously, there is something to the growth. One of the factors going into the predictions for continuing growth is that there are institutional managers out there taking the “wait and see” approach. They want to see if blockchain technology continues on an upward trend. If so, the perfect moment to take the important step toward it could present itself. Right now, financial experts are saying that Bitcoin shares will hit $40,000 in the next year or so, which means there is a lot of promise in the cards.

At the same time, investors can also continue to see great volatility. This can make the ride very exciting, especially when the value goes up after investing low. Bitcoin will most likely remain the top cryptocurrency and may split off again into more smaller cryptocurrencies. On Aug. 1, 2017, Bitcoin split to create Bitcoin Cash.

The split into Bitcoin cash presented another cryptocurrency investment opportunity. At this time, the share price was $16,000. As soon as the split occurred, Bitcoin Cash traded for $2,600 per share. This made it easier for those not wanting to invest more than $10,000 per share to get a piece of Bitcoin. If Bitcoin splits again, investors will have another lower-cost opportunity to invest. This doesn’t mean that the volatility won’t still exist, especially since regulatory actions against Chinese cryptocurrency trading are having an impact.

Prediction 2: Disruption in the Commodity Markets

Blockchain technology is open source, so it’s always changing. This constant change will make it easier for electronic services to be offered in the marketplace. This could lead to additional digital commodities being traded on the market. Growth can also increase the need for more data miners to make it possible to secure crypto coins. Data miners are paid in “blocks” for their work

Nonetheless, it isn’t known what miner protocols may become more prominent. There will be a winner, which could convert more of the doubters into believers so that the market can become more whole.

Prediction 3: Cryptocurrency Will Become More Popular

As more doubters learn about cryptocurrency and blockchain technology, more will move to this system. Even everyday people are learning about cryptocurrency because of the degree of exposure in the media. For those following cryptocurrency, more derivative products are getting attention. Bitcoin futures launched in December 2017, creating a new derivative product. The U.S. may also see regulatory approval of a  Bitcoin exchange-traded fund.

As of now, the U.S. Securities and Exchange Commission has been rather silent about the CBOE’s cryptocurrency ETF filing. If the move goes as planned, the ETFs could go live sometime in 2018. This would be another move that would increase the involvement of institutional investors.

Should You Invest in Cryptocurrency?

Of course, volatility is always going to be a factor, and that can make it difficult to decide to invest in cryptocurrency. The future does seem promising. Plus, there are many cryptocurrencies out there.

Here are some points to evaluate when determining if cryptocurrency investing is right for you:

  • Cryptocurrency values can fluctuate by hundreds or thousands of dollars in a single day.
  • Cryptocurrency is young, so there is a lot of promise in this market. This also means it will experience “growing pains” for a while.
  • Bitcoin isn’t the only cryptocurrency you can invest in since there are hundreds more vying for a top position.
  • The internet bubble may eventually pop, but cryptocurrency is moving toward becoming a major player in the market.
  • Cryptocurrency is a risky investment, so it may not be for someone who doesn’t like risk.
  • U.S., Russian, and Chinese regulators are having an impact on cryptocurrency. Regulation can impact it, but not necessarily destroy it.
  • You can turn to Coinbase or buy GBTC to start the process of cryptocurrency investing, but there is a cost associated with these gateways. You could use an open exchange online, but there is a learning curve in exchange for lower cost.
  • The market could potentially become saturated with coins if too many are released at once. This could lead to low-quality coins that don’t increase in value like the investor hopes. It’s imperative to do research before investing.
  • The banking system can’t influence cryptocurrency because crypto coins are decentralized.
  • A little bad news can cause sell-offs, which pulls down values. However, a lower value can transfer into more buys.

If you’re not certain about investing in cryptocurrency, that’s OK. You can do research and see how the market behaves before taking on the challenge. The opportunity can be an exciting one, but you should feel confident before taking that step. No, you don’t have to be wealthy to invest in cryptocurrency, but it’s important to be vigilant.

You also don’t have to invest in Bitcoin. There are other coins out there, such as Ethereum, Monero, Litecoin, Zcash, Ripple, and Dash. It’s wise to invest with money you already have or disposable income you can afford to live without. Some people use the personal loan as a way to fund investments, but this isn’t recommended. The investment can lose money, but then there’s a debt present that has to be repaid. Loans are more ideal for taking vacations, improving your home, buying a vehicle, or paying off old debt.

In the end, it’s important to do research and study the behaviors within the market before sinking money into a cryptocurrency investment. There’s a lot of information available on the internet, and Bitcoin and other cryptocurrencies are getting a lot of media coverage. If you decide to make the investment, there is a lot of short-term and long-term investment potential.