Cryptocurrencies in general have created more than a little buzz in the investment community. But the public and meteoric rise (and fall) of Bitcoin, particularly this year, has garnered unusual attention and investment. Many developments have fueled the Bitcoin excitement, but its visible and public growth from $956.23 at the close of 2016 to valuations exceeding $8,000 already this year, places it squarely in the spotlight. Long term growth is a valid consideration, but the short term roller coaster ride is what traders love more than anything and the 31% dip in four days (11/8/17 – 11/12/17), generated by the launch of the digital currencies offshoot Bitcoin Gold has solidified investor attention.
Bitcoin is the undisputed leader of cryptocurrency mania, but as the number of cryptocurrencies available rapidly approaches 1,200 there are many investors buying into newer offerings in hopes of skyrocketing returns similar to Bitcoin. At this point, the most popular cryptocurrencies behind Bitcoin are Litecoin (LTC) which launched in 2011, Etherium (ETH) launched in 2015 and split in 2016 (ETH & ETC), Zcash (ZEC) launched in 2016, Dash (originally known as Darkcoin) launched in 2014, Ripple (XRP) launched in 2012, and Monero (XMR) launched in 2014. The ultimate winner of this cryptocurrency bonanza will be determined by consumer appreciation of engrained features to the application, whether it has to do with security, mining requirements (or lack of), or “the next best thing.” Greater consumer acceptance will provide greater retail support and therefore greater liquidity.
The Fed’s poor execution of monetary policy has all but eliminated the possibility of substantial gains in popular investment vehicles, such as bonds and Treasury notes, so investors are scrambling for growth opportunities. Meanwhile, the stock market continues to run up, but an oversold and long-in-the-tooth bull stock market demands diversification, now more than ever. Any investor trepidation with Bitcoin longevity was wiped away at the end of October when the Chicago Mercantile Exchange announced plans to launch Bitcoin futures in the fourth quarter of this year, pending all relevant regulatory review periods. Terry Duffy, CME’s Chairman and Chief Executive Officer reported, “As the world’s largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities.”
As investor competition in the cryptocurrency space has intensified, gold and silver have consolidated, held higher lows, and prepared for a quantum leap at the first sign of a market consolidation or collapse. In the absence of a meaningful equity correction, a terrorist attack, tax plan delay, or increased aggression between Iran and Saudi Arabia could provide the necessary precious metal catalyst. However, at any rate, with the stock market near an all-time high and precious metals at levels 1/3 to ½ of previous highs, the opportunity to capture profit and convert funds into the next precious metals bull run could never be better. Solidify your financial legacy now, but no matter what, don’t get caught without a chair when the music stops! Call American Bullion at (800) 465-3472.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.