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Probably one of the most talked about topics on markets in 2017 is Bitcoin. With thousands upon thousands of people being drawn into investing in Bitcoin with the lure of making exceptional returns in a very short period of time. The graphic below takes a look at the share price history of Bitcoin in both South African Rands and US Dollars
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The magical rise in the price of the world's best known "cryptocurrency"
The graphic below shows the astronomical rise in the price of Bitcoin, the world's best known cryptocurrency. The graphic shows both the price increase in Bitcoin in US Dollars and in South African Rands.
For those not comfortable playing with the interactive chart above, the two images below shows the price movement in Bitcoin for the Year to Date and for the last 30days. And in both instances it is clear that it seems to be an uninterrupted price increase in Bitcoin. Such behaviour is extremely unhealthy and regular corrections are required in order to sustain long term price growth, as corrections weeds out speculators and chancers.
Year to Date
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Last month (30 days)
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Latest news in the Bitcoin world, is that Bitcoin futures will be launched soon, which will allow market participants to bet against the rapid price growth in Bitcoin, making market participants in Bitcoin weary that the big expected bursting of the Bitcoin bubble might be fast tracked with the introduction of these futures.
This article from Bloomberg below discusses the Bitcoin futures mentioned earlier:
A short snippet of the article:
"The intersection of digital money and traditional finance is at 400 South LaSalle Street in Chicago this weekend. That’s where trading in bitcoin futures opens Sunday evening, as the first major U.S. exchange offers a product pegged to the wildly fluctuating cryptocurrency.
The currency has risen more than 1,500 percent this year, and about 85 percent just in the past two weeks, driven largely by demand from individual investors. But even as bitcoin -- launched in 2009 as an alternative to banks -- divides Wall Street executives and central bankers worldwide, those kinds of gains are a powerful magnet."
Bloomberg Article
This article from Bloomberg below discusses the Bitcoin futures mentioned earlier:
A short snippet of the article:
"The intersection of digital money and traditional finance is at 400 South LaSalle Street in Chicago this weekend. That’s where trading in bitcoin futures opens Sunday evening, as the first major U.S. exchange offers a product pegged to the wildly fluctuating cryptocurrency.
The currency has risen more than 1,500 percent this year, and about 85 percent just in the past two weeks, driven largely by demand from individual investors. But even as bitcoin -- launched in 2009 as an alternative to banks -- divides Wall Street executives and central bankers worldwide, those kinds of gains are a powerful magnet."
Bloomberg Article
Performance of Bitcoin in Rands and US Dollars
The following section will take a look at the returns achieved by Bitcoin in both US Dollars and South African Rands over various time periods.
1month:
Rand Price per Bitcoin: 108%
US Dollar per Bitcoin: 115%
Year to date:
Rand Price per Bitcoin: 1 454%
US Dollar per Bitcoin: 1 457%
12months:
Rand Price per Bitcoin: 2 020%
US Dollar per Bitcoin: 1 994%
2 years:
Rand Price per Bitcoin: 3 518%
US Dollar per Bitcoin: 3 740%
5 years:
Rand Price per Bitcoin: 118 842%
US Dollar per Bitcoin: 187 116%
The above numbers clearly shows the extraordinary growth in the price of Bitcoin, even though it is not regarded as a means of exchange or a store of value in any large number of countries which makes us believe this is arguably the greatest asset bubble in history and when it pops it will be brutal and severe and a lot of people will lose all of their life savings as they keep jumping into it hoping to achieve the same kind of growth in future as Bitcoin has in the past.
1month:
Rand Price per Bitcoin: 108%
US Dollar per Bitcoin: 115%
Year to date:
Rand Price per Bitcoin: 1 454%
US Dollar per Bitcoin: 1 457%
12months:
Rand Price per Bitcoin: 2 020%
US Dollar per Bitcoin: 1 994%
2 years:
Rand Price per Bitcoin: 3 518%
US Dollar per Bitcoin: 3 740%
5 years:
Rand Price per Bitcoin: 118 842%
US Dollar per Bitcoin: 187 116%
The above numbers clearly shows the extraordinary growth in the price of Bitcoin, even though it is not regarded as a means of exchange or a store of value in any large number of countries which makes us believe this is arguably the greatest asset bubble in history and when it pops it will be brutal and severe and a lot of people will lose all of their life savings as they keep jumping into it hoping to achieve the same kind of growth in future as Bitcoin has in the past.
We do not advise readers to invest in the crypto currency frenzy as the likelihood of losing money increases every single day the price keeps rising, based on a limited store of value for Bitcoin, and not exactly a lot of places that it can be used as a means of paying for goods. India has for example warned numerous times that it does not recognize Bitcoin as a legal from of tender.
In addition to this the fact that the currency is not regulated makes governments nervous as it provides and easy way for individuals to launder illicit money. We therefore predict that governments across the world will soon step in to regulate it to some extent, Which will have a significant impact on the price of crypto currencies.
Another worry is the fact that the cost of "mining" Bitcoin is extremely expensive and the operating systems used to run these crypto currency mines draws enormous amounts of energy, so the question becomes is it a viable way of earning a living when the cost of running such Bitcoin mines might far outweigh the reward of mining it.
In addition to this the fact that the currency is not regulated makes governments nervous as it provides and easy way for individuals to launder illicit money. We therefore predict that governments across the world will soon step in to regulate it to some extent, Which will have a significant impact on the price of crypto currencies.
Another worry is the fact that the cost of "mining" Bitcoin is extremely expensive and the operating systems used to run these crypto currency mines draws enormous amounts of energy, so the question becomes is it a viable way of earning a living when the cost of running such Bitcoin mines might far outweigh the reward of mining it.
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