Well the last week of Bitcoin 2014 certainly did not shake out the way many hoped as we find ourselves searching for the reason of the recent price dip. With analysts pointing fingers in nearly every direction it can be difficult to hear through the noise in order to identify the true issues. If we were to draw comparisons to other security markets, we may be able to correlate the data. Investors in US securities often sell off stocks and other assets that have failed to meet their goals in order to avoid paying short-term capital gains taxes. This phenomenon has become so prominent that often firms develop trading concepts around these oscillations. While it remains difficult to determine the exact reason, one thing remains the same, bitcoin is here to stay. With that being said, let’s pull ourselves from the muddled past of 2014 and instead look forward to the bright and shiny new 2015.
One of the more exciting topics of 2015 is derivatives. A large concern for a variety of bitcoin companies including payment processors and miners is the risk associated with maintaining larger quantities of cryptocurrencies. Now with the ability to hedge their digital asset holdings, I believe business will find the idea far more palatable. This stability could not only help to significantly grow existing bitcoin companies but pave the way for a variety of other options.
Other important notes to keep in mind are the transactional volume of the currency itself as we saw record breaking jumps in the volume throughout 2014. That volume will undoubtedly translate into an increase in valuation. This holds especially true versus other non US currencies. As we’ve seen the value of a US barrel of oil approach $50, we have seen other currencies around the world experience drastic value loss. The Russian Ruble alone lost nearly a 3rd of its value in a matter of a few weeks. This destabilization of local currencies has the potential to push bitcoin value as citizens of these nationals seek financial refuge within the cryptocurrency world.
Bitcoin will continue to stabilize, especially as companies such as The Coin Tree enter the market with easy to use practical applications. Those few of us who are Bitcoin veterans certainly aren’t afraid of a little roller-coaster, I still remember the $32 to $2 collapse a couple years ago. The difference between then and now is simple, then, we weren’t sure where Bitcoin was going to go, now we know that Bitcoin is here to stay. Buckle your safety belts if you’re new to cryptocurrencies, because it will certainly be a wild ride on our way to the moon.
By: Andrew Durgee
CEO – The Coin Tree