How To Analyze Bitcoin’s Growth
Bitcoin has proven to be one of the trickier assets in all of the modern investment when it comes to predictions and analysis. While there are plenty of people who made a great deal of money during the 2017 surge, others who correctly predicted a sharp decline thereafter, and people who fancy themselves bitcoin prophets, the simple fact is that this is a young, volatile commodity with an extraordinarily unpredictable future. You can read very persuasive arguments suggesting that bitcoin will effectively be defunct in five years’ time, or that it will be worth $100,000 by the end of the same period. The not-so-secret truth is this: nobody really knows!
Given this then, how are those considering investing to analyze potential growth in bitcoin? Clearly, there is no exact guidebook on how to do so, or we’d all have become millionaires in November of last year. There are however some general tips to be mindful of and areas to watch to gain a clearer picture of where bitcoin and cryptocurrency, in general, may be headed in the long term.
Ignore The Arguments
I mentioned above that there are very persuasive arguments pointing in all different directions regarding bitcoin. That doesn’t mean you need to find the right one, so much as that you need to ignore them – at least insofar as you might trust them as concrete predictions. There’s certainly nothing wrong with reading different perspectives, and ultimately it can help you to gain a better understanding of the market. However, you should ignore the innumerable arguments out there, for now, in that none of them can really be taken as being more meaningful or accurate than the rest. Again, the truth is that nobody really knows what’s next for bitcoin; someone will be proven right, but this is always the case in the prediction business.
Watch For Spending Opportunity
One means of determining growth potential could conceivably be identifying usage potential. The more people can use bitcoin the more they’ll need it, and the more demand there is, the more valuable it may become. That said, seeking out these opportunities is easier said than done, because it’s unlikely that your local grocery store will suddenly start doing a high volume of bitcoin business. One example of a place a lot of people wouldn’t think to look, but where bitcoin actually is on the rise as a currency is the online gaming market. Specifically in the casino strain of this business, there’s always focus on new sites, the latest games made available, bonus opportunities… and payment options. As of a couple years ago, these are starting to include bitcoin, and if you keep a close eye on the industry you’ll find that the bitcoin activity is spreading. This is just one example, but it’s just the sort of thing to look for.
Keep An Eye On Competition
Right now, the very idea of competition for bitcoin is almost something of a misnomer. It remains the most valuable cryptocurrency and the most widely known by a great margin, and things should stay this way at least for the foreseeable future. That said there are plenty of knowledgeable crypto analysts out there who envision existing alternatives such as ethereum gaining ground eventually, or who predict that there could be brand new cryptocurrencies that rise quickly when they emerge. For these reasons, it’s at least worth keeping an eye out for bitcoin competitors, because if something better or more effective does make itself apparent, bitcoin could struggle as a result.
Mind Regulation
So far government regulations on bitcoin have been something of a roller coaster ride to track. The clear reality is that most governments don’t know what to do about cryptocurrency, and thus they have been somewhat indecisive regarding regulations. Nevertheless, the fact remains that at any given moment a major financial system can make a decision that affects bitcoin either directly or indirectly. So really, government regulation is one of the things that definitely needs to be on your list of factors to monitor.
Continue To Watch The Regular Economy
Part of the appeal of bitcoin to a lot of people is that it’s not part of the regular economy. It exists in its own system and as its own entity or category, and thus it can be invested in without much direct concern for ordinary stock markets or economic factors. Still, it’s becoming a popular argument that a financial crisis could bring a bitcoin boom, which means it’s still very much worth your while to keep close tabs on the “regular” economy as well. Trusting blindly that a market dive could result in a bitcoin leap is not necessarily wise. However, keeping an eye on how the two move in relation to each other can potentially give you insight as to if and when bitcoin may experience a wave of growth.
