The currency that has been around for almost eight years and currently stands as the largest digital currency by market capitalization, had a crazy week during the last week of November. Looking at the start of this year, bitcoin managed to soar by over $10,000 in price increase to over $11,000. This is price action that is almost unheard of in most markets and investor vehicles.
After the currency hit this all time high, the coin dropped by around 20% in value to just under $9,000. This currency rollercoaster has put headlines out such as “investors should do their homework” and the likes of that. Many should beware of the ins and outs of the market before they decide to sink any money into bitcoin or cryptocurrency as a whole.
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David Yermack, a professor of finance and business transformation at New York University stated that “this week is no different. Bitcoin has always been very volatile. Anybody who invests should have a large amount of risk tolerance.”
The idea of a futuristic digital currency did not come about until recently. For many the idea of a decentralized currency is quite scary if anything, and can lead to fear from investors. The industry on digital currency has also been flawed by the reputation that it is only used for black market purchases. This has left quite a shabby reputation for the currency that has not led investors to be inclined to invest in it, especially if they come from cornerstone markets such as Wall Street.
The alternative forms of currency can serve as a new financial system that has the potential to shape and reshape the current state of the financial market around the world for some time to come. The hopes are high that digital currency can overcome the criticism from across the market and succeed as a currency.