A few days ago when I decided to write this article about the prospects for Bitcoin and Ethereum for the remainder of 2018, they had both enjoyed a month-long bull run. BTC had almost doubled from $6,000 to $11500, and ETH had gained more than 35% from $630 to $860.
Within a couple of days that all changed and the bears took over. Prices fell sharply, primarily due to the following crypto headlines:
- The SEC will be regulating crypto exchanges
- Mt Gox bankruptcy trustee has recently sold Bitcoin worth $400m
- Binance exchange had to halt withdrawals following an elaborate phishing hack
Cryptocurrencies have always been more volatile than traditional stocks and shares as we saw last year. When the mainstream media finally realized the potential benefits of blockchain technology, they helped push up the price of Bitcoin from $1,000 to close to $20,000. It was hardly surprising that prices fell sharply in the first couple of months of 2018 following such a meteoric rise. Some pundits were still proclaiming that Bitcoin might be worth $1m within a few years.
The South China Morning Post recently published the results of a survey carried out by Finder.com of price predictions for BTC and ETH during 2018. The survey asked nine blockchain participants for their forecasts for the top 12 crypto coins, but the assumption is that they will be fairly bullish as they are existing participants.
The average value of Bitcoin by the end of 2018 came out at $29,533 and Ethereum at $2,550 but note that the forecasts were made just before the recent dip. If these forecasts materialized, it suggests that switching from BTC to ETH would provide higher returns for investors.
Other pundits suggest we could see values falling quite significantly throughout 2018 amid tighter regulatory control throughout the world. What I can safely predict is that Bitcoin and Ethereum developers and their respective communities will continue to move the projects forward, and this should result in broader adoption and acceptance of cryptocurrencies by the general public. Always look at the underlying project associated with the coins you have, or are planning to invest in, rather than recent price swings.
Another prediction I am happy to make for the rest of 2018 is that we will see continued volatility across almost all cryptocurrencies, with daily swings of over 10% being a fairly regular occurrence. For very experienced day traders, this should continue to provide further opportunities for substantial short-term gains. Day trading is not something I would recommend though unless you are prepared to lose your entire investment, however, returns from cryptocurrencies have been unprecedented for hodlers in recent years.
Obviously, none of this should be construed as investment advice. You’ll want to consult a professional advisor for that. However, if you want to see what the wider community thinks, why not join in the discussion in our lively Telegram community?
Financial analyst, smartphone app designer, technical writer, and crypto enthusiast. Blockchain verified graduate of MOOC 9, DFIN-511: Introduction to Digital Currencies, run by the University of Nicosia.