Bitcoin could be at $40,000 at the end of 2018.

 

This does not mean that you should dump everything you have into bitcoin. In fact, for smaller investors, this is more likely to cause problems than anything else. Ideally, one should invest no more the 3% into the cryptocurrency.

Uncertainty and volatility seem to be inseparable from the crypto-market at this point, but it is hard to deny that the recent growth has been staggering. Just to remind you, at the start of this year, the bitcoin went for no more than $1,000. And the most recent peak has seen the coin rise to the $20k mark.

As Novogratz’s statement implies: not everyone believes the recent downward trend is going to last. Bitcoin needs to stabilize and correct the price after the hike as the current model does not seem to be particularly sustainable. This should not necessarily mark the end of the value rise, however.

How realistic is this prediction? It is difficult to tell given that this optimism is hardly unanimous in the investment community, but one thing is certain – cryptocurrency in general, and Bitcoin in particular, should not be underestimated.

After testing the waters with smaller investments, quite a few Hong Kong users have decided to increase their stakes in the leading cryptocurrency, swamping the relatively inexperienced exchanges with orders. For the customers that are used to immediate assistance and pretty much direct access to purchased commodities, the realities of the bitcoin exchanges that are unable to handle the load might be pretty frustrating. Some would have to wait for weeks for their orders to be approved. Given the volatility of the market, it’s clear why some of the customers find these inevitable delays discouraging.

The influx of new investors who scarcely understand the realities of the cryptocurrency market and are simply looking to make a quick profit endangers the budding industry. The risk of collapse, in tis turn, invites more potential regulation from the Securities and Futures Commission (SFC) – hardly a desirable outcome for the local cryptocurrency platforms.

Knowing and accepting the risks associated with the cryptocurrency trading is the crucial part of navigating the current market. And rushing into the scene in hopes to ‘win big’ is more likely to hurt both the investors and the future of the technology in general.

The original fork that separated Ethereum Classic from Ethereum proper was the consequence of a massive hack. It all started with the DAO (Distributed Anonymous Organisation) – a capital venture of a kind that gave ether-holders an opportunity to purchase DAO tokens. Those were used to determine the investment strategy of the fund. The investors could leave at any point, but would have to wait 28 days to withdraw their ether.

Unfortunately, hackers have found a way to exploit the weakness in the system and stolen more than $50 million in ether. This nearly killed Ethereum. Needless to say, something had to be done. And the clock was ticking – the hacker would be able to get away with investor’s money in 28 days.

The debate that took place was more philosophical than practical. While the majority agreed to reverse the hack and transfer the funds back, a part of the community felt that this betrayed the very idea of the blockchain. It should have been an unassailable monolith, and not even this hack was cause enough to change that in their eyes.

This was an irreconcilable difference that caused the hard fork. Most have moved on with Ethereum (including the developers of the platform – Gavin Wood and Vitalik Buterin), but select few remained loyal to their principles and named the resulting currency Ethereum Classic.

So, which one is better? Ethereum has certainly found success, not only recovering from the devastating loss, but moving on to become the cryptocurrency with the second biggest market cap after bitcoin. Rising as high as $700, it has outshined its sibling, but both currencies have their zealots.

While Ethereum seems to be a much safer bet with a clear path forward, many believe that the choice between the Ethereum and Ethereum Classic has a lot more to say about the personal’s ideology than their business acumen.

Any international proceeds will be viewed as illegal and highly suspect by the government, which puts a lot of the investors in the region into a rather precarious position. However, the situation is not as clear as it the Kuwait’s officials would like the public to believe. Their official stance is far from the open-minded approach of the neighboring Bahrain, but they lack the regulatory power to back up the prohibition.

The ministry (along with the Central Bank of Kuwait) do not have the authority to actually punish any cryptocurrency trading. Since any transactions take place over the internet, the crypto-market seems to be out of reach for both institutions at the moment.

Still, the lack of government support or even acknowledgement does increase the risks for investors in an already volatile market.

An early investor in bitcoin, Smith has moved to other cryptocurrencies and tech stock, diversifying his portfolio over the years. What’s more interesting, eToro – the social network for the traders –  uses contracts for difference commonly known as CFDs. This adds a lot of risk to an already unstable market, allowing investors to bet on the cryptocurrency prices. While the company claims to protect the users from losing more than they originally invested, the risks are considerable. This does not stop people from following Smith on the platform and copying his every move.

A school dropout, Jay Smith has been involved with eSports from a very early age and was quick to recognise the value and potential of cryptocurrencies. He went on to purchase a number of digital tokens, earning on the price differences. In his opinion, CDFs and cryptocurrency are a natural fit, and with the protection provided by the platform and experienced investors as guides, there is no harm in trying.

With the volatility of the market, people need to be prepared to weather losses, and Smith does not worry about 20% drops. He has seen worse, having survived the 2013 crash. The ebb and flow of the cryptocurrency market is familiar to him at this point, and with experience he has gained confidence. Considering the number of people that follow Smith on eToro, this confidence might not be misplaced.

As for the future of the market, here’s what we’re advised to expect:

The traders who like volatility will go there and to similar cryptocurrency markets as Bitcoin continues to grow and stabilise.

On one hand, aggressive tactics of buying large quantities and selling them off after huge price hikes might work out in the short term, on the other – that is not the main purpose or even an idea behind these currencies. Contrary to the belief of the establishment experts (some would call it wishful thinking), digital currencies are more than a fleeting trend and a massive bubble. They are the way of the future, offering unprecedented flexibility and security for the regular users.

Sooner or later, fiat currencies are going to be replaced by the cryptocurrencies we are seeing now, maybe not in their current iteration, but the shift is inevitable. This is why, ignoring massive price fluctuations might be a better solution in the long term. It is neither the most exciting nor the most original advice. It does, however, take into account the larger picture and the world where the cryptocurrencies are not the curious oddity for the few, but the boring everyday reality for the many.