When it comes to modern-day currency investing, there’s nothing quite as mysterious and alluring as Bitcoin. The crypto-currency has attracted millions of investors worldwide and has shown faster gains than any other asset in history. In its first 4 years it went from being worth less than $0.01 to a whopping $1,000. As of today, it is hovering around $1300. So how did it become the fast-tracked investment monster it is today, and what does the future hold for this most enticing of technical innovations and digital investment assets?
Growing up fast
Bitcoin is still considered the proverbial new kid on the block by many – a niche crypto-currency for speculative traders. But that reputation could be about to change. The new kid is suddenly growing up very fast, with the first ever Bitcoin ETF (exchange-traded fund) due to be approved by the SEC (Securities & Exchange Commission in the US) any time soon. This will mean it gets listed on the New York Stock Exchange, making it a genuine mainstream investment.
As well as shifting it significantly towards the mass market, a Bitcoin ETF means that investors can then invest in a fund that tracks an index of Bitcoin exchanges. The ETF also allows ‘normal’ investors like you and me to invest in Bitcoin without actually having to buy or hold the digital currency themselves.
Race for the prize
A Bitcoin ETF called Winklevoss Bitcoin Trust (COIN) was recently denied its application but it’s widely believed a new application, or one from a different supplier, will pass the regulations this year. COIN was primarily the work of the Winklevoss twins, Tyler and Cameron. Priced at $100 million and more than three years in the making, the ETF would give investors exposure to Bitcoin via a mainstream instrument on the NYSE for the very first time. If not COIN, the first Bitcoin ETF to get SEC clearance will be a clear statement that Bitcoin is set to stay and become a part of investor portfolios of all shapes and sizes.
So what would this do to Bitcoin’s valuation in 2017 and beyond? Bitcoin prices have been on a steady incline for weeks in anticipation of a positive decision from the SEC, consistently reaching new record highs. Many think there’ll be a new wave of activity pushing it higher still once an ETF gets the green light.
Is it time to snap up Bitcoins?
I’m not in to crazy speculative investments but do find interest in very early-stage investment vehicles, even if they’re very volatile like Bitcoin. I’m prepared to risk and potential totally lose the amount I put in so I’d only go for small ‘bets’ on assets like Bitcoin, just the same as I treat the new P2P platforms where I have put a few £k into the likes of Property Partner, The House Crowd and Ratesetter. Bitcoin too is still one of those fascinating early-stage volatile markets.
There is a good chance we could see Bitcoin prices above $2000 by the end of the year as investment flows into the Bitcoin market and the many companies that operate within the Bitcoin eco-system. There will still be some growing pains, I’m sure, especially around scaling the technology as a payment network, and it still has work to do to shake off its negative associations with dirty money, drug rings and so on. But in the race to become the first globally accepted and endorsed crypto-currency, Bitcoin is lapping the competition, so it will continue to generate huge interest.
Despite its relatively young age, Bitcoin has already been on an amazing journey. Back in 2009, it was worth next to nothing. Today, it is priced around $1,300 (and climbing). And it has seen gains in seven out of those eight years. Bitcoin is now set for a colourful new chapter in its already-vibrant history. There will be challenges ahead and bumps in the road, no doubt, but the appeal of Bitcoin continues to grow at an incredible pace.