Hi all,
This is my original independent thoughts and analysis, feel free to disagree with me I would love to hear your thoughts in the comment either way.
Bitcoin 2017 Review
Bitcoin was, and still is the dominant Cryptocurrency, but looking forward into 2018 and beyond this situation could change significantly.
Looking at the most up to date graphs we can see the market dominance of Bitcoin has dropped from 87% one year ago today to now an all time low of 32%. During that time the value of bitcoin has continued its unerring rise against the dollar.
Doubtful.
Looking at BTC in the year ahead...
Firstly I am going to give the positives looking at the year ahead.
Many many more people are now aware of bitcoin and are trying to get involved with it, this is great for bitcoin and the rest of the cryptocurrency market. A rising tide raises all boats.
Huge names are starting to take cryptocurrency seriously and are taking positions in the market. Yesterday Peter Thiel billionaire founder of Paypal revealed he has jumped in feet first into bitcoin, buying a large position in mid 2017 and seeing huge gains on his gamble. This shows that big players and companies are starting to seriously look into bitcoin and cyrpocurrency investing seeing the huge bull market and wanting to take advantage. This is good for news for bitcoin.
I expect that bitcoin will continue to see increases in value throughout the year but a doubling or tripling of the current value will be a best case scenario. On the pessimistic side I could even envision a year end value that has slightly stagnated to leave BTC with a $12-13 000 year end value.
Why?
There is more than one reason that BTC could end up stagnating, and I will go through the main points with you below.
- Fees - Sending BTC from one address to another incurs a transaction fee, this used to be a very small amount, that would not effect any reasonable sized transfer, but as bitcoin has grown so has demand to move BTC around and congestion has forced people to raise the fee in order to get the BTC sent in a timely manner. The fee peaked at an astonishing $55 in December. This is and will seriously put off anyone new to the BTC game so it is discouraging for smaller investors.
- Speed - Linked to the issue of fees, making a transaction when bitcoin first started used to take a few minutes, but the way BTC was designed meant that only a few transactions could happen every second, which was fine when bitcoin was much smaller with fewer people making transactions. Today there is severe problems in trying to send BTC in a timely manner without paying large fees.
- Psychology - New investors who don't understand fully the Bitcoin world find it hard to invest a $1000 only to receive a measly 0.07 BTC, this is still a $1000 but to the average person the psychology of only getting a tiny part of 1 BTC is disheartening and off putting. This is leading to many starting to look at other less expensive coins. Recently some of the cheapest coins are seeing the biggest gains from new investors who like to be able to invest $1000 and have hundreds of coins, not 0.07 of a coin.
- Mining - Mining is now totally out of reach on BTC for anyone who isn't a serious player located near a cheap power source willing to invest tens of thousands into ASIC miners at scale. The concept of mining used to appeal to the independant players who liked to use their own computer to feel like they were part of the BTC community by mining for coins. This has now gone and wiped that niche from BTC as miners have had to convert to other coins.
- Technology - The technology to create BTC was groundbreaking when it was released and few saw the huge potential it had. The blockchain was a whole new way of thinking about currency, bitcoin came out 9 years ago and since then BTC has barely made any major changes. In that time a lot has happened and people have developed and iterated on the original BTC idea, other coins have pushed the technology further and the weaknesses bitcoin has with its speed, fees, and privacy have been ironed out in various coins. That second wave of coins is now rising faster than bitcoin, and have show more real world usage potential. A third wave of coins is now coming through often built directly into and ontop of the 2nd generation coins like Etherium. These 3rd wave coins are looking to solve difficult real world problems and try to find their value in doing so.
- Whales - Linked in with the technology point above is the reason why bitcoin has been surpassed by other coins. Bitcoin was the first coin, and it has not evolved since then. Developers have tried to change bitcoin and encourage all those holding bitcoin to accept change is necessary but have never managed to gain a consensus on any changes that would help bitcoin to be a better cryptocurrency. Large coin holders often being very conservative and scared to change anything incase BTC loses value from the changes have made BTC stand still while others have evolved.
The 6 reasons above are the main ones why I think BTC is going to have a much harder year than many previous years.
I strongly believe that before the year is out there is a change that another crypto could easily overtake BTC in market cap and once that happens I believe there will be a huge turmoil for BTC and it could easily lose value very quickly.
Those who have held BTC until now have had an easy ride on the rollercoaster as long as they kept their heads but this year will likely be the most difficult in Bicoins 9 year history.
I still believe strongly in cryptocurrency as a whole but I think that not all coins will grow as strongly as they have previously. The competition among the altcoins is massive, and they are going to keep improving and strengthening in 2018
If anyone would like to diversify away from bitcoin and into the newer upcoming coins I would recommend both Binance & Kucoin.
These two exchanges have a lot of the major currencies and also focus on upcoming altcoins that have good potential. Thanks for reading!
Looking at the graph above we can see that at the start of the year BTC was valued at just above $1000, it has finished the year at around $15 000 a huge 15 X increase. An amazing year for bitcoin which has proved many doubters wrong. Does this mean we can expect the same from 2018?
I think bitcoin will remain fairly steady but in this market, steady means you're losing market share. There will be plenty of other cryptocurrencies that see 10x and 20x returns. Bitcoin will continue to be a top 10 crypto but the days of 50-60% market dominance are over.
I have to agree, and I hope everyone has a diversified portfolio of coins to take advantage of this fact