3,2,1… Counting Down to the 2018 Cryptocurrency Lift-off
Rewind just sixty-odd days, and you’d be forgiven for believing the blockchain dream was over — then again, mainstream media loves the “bubble-bursting” pop of a cryptocurrency-bashing news story.
But it seems the bulls are back — or scratching the ground before they charge, at least.
Why We Believe A Bull Market is Coming
The market cap of all cryptocurrenies has gained roughly 75-percent in the last month (though prices remain extremely volatile with daily rises and falls). More presciently, Q1 2018 ICO investment raised funds to the tune of $7.4bn; or, more than the $6.9bn war chest of the whole of last year.
Suffice to say; positive sentiment has returned.
But why the sudden turnaround? What are the credible sources saying? And how can investors prepare for a surge?
The Big Guns are Taking a Seat
If one thing adds credibility to a market, it is when the major players show their hand.
As the likes of Goldman Sachs take their first concrete steps in setting up a cryptocurrency trading desk, legitimacy increases. Whilst the move also underpins growing confidence in the ongoing regulatory saga, this reinforces the widespread belief in the market’s long-term viability.
With members of other notable financial institutions (read: Blackrock) stepping out of the traditional to refocus investment efforts squarely on the blockchain, it’s clear more smart money will flow in.
All the while, billionaire cryptocurrency optimist Peter Thiel is quietly making his own bet there are significant volumes of institutional capital waiting in the wings.
Influencers Believe; and Break Ranks
It is not only money doing the talking. Influencers such as Tim Draper continue to lay claims that blockchain is ‘bigger than the internet;’ with the potential to have a more profound impact than the Industrial Revolution.
His long-term view remains of Bitcoin surging past the $250k per coin mark at some point within the next four years.
As major cryptocurrency exchanges continue to enjoy exponential growth — luring influential Wall Street Executives into their senior ranks — the market holds increasing weight.
So, what are investors to do? Well, if a bull market really is on the horizon, now could be the perfect time to invest.
However, caution is paramount.
Dollar-Cost Average (DCA):
The market continues to fluctuate on a daily basis. So, to mitigate the risk of short-term loss, always leverage the dollar-cost average investment technique. In short, this means drip-feeding money into cryptocurrency over days, if not weeks.
Therefore, if the market drops, you avoid rapid losses and instead track the downwards movement, reducing the average cost of your holdings.
70:30 Profit Taking:
A second approach to benefit the profit takers: should the market rise and you want to lock in profits, consider taking 70-percent of your money off the table; but leave 30-percent.
This guarantees a return but — somewhat like DCA — offers further upside, should the run continue.
Opportunity in ICO’s:
2018 could be the ‘Year of the ICO.’ With improved regulation, there are arguments the market is getting safer by the day. However, with the ongoing security vs. utility debate, be sure to understand the context of any investmentbefore piling in.