View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
August 7, 2018

Are bitcoins a good investment despite their price volatility?

By Saloni Sardana

Bitcoins are the new norm, and this token has grappled attention on every corner of the globe. Despite its rising popularity, the price of bitcoin and other cryptocurrencies have been extremely volatile. So this begs the question: why are bitcoins a good investment today?

The price of bitcoin hit a low of $5,848.26 on 28 June 2018, data on industry website CoinDesk shows. 

This is significantly below its peak price of around $20,000 in December 2017.

It recovered slightly over the next couple of weeks, and the current price is just below the $7,000 mark.

Bitcoin was the first and is the most popular cryptocurrency, which is a digital currency designed to act as a medium of exchange. Cryptocurrencies use cryptography to secure and verify transactions and to control the creation of new units of a particular currency.

So are bitcoins a good investment?

To a large extent yes!

Here is why you should still care about them:

  1. Institutional investors are interested in them.

This comes as several big institutions have displayed interest in accepting bitcoin as a method of payment, and have launched different products pertaining to bitcoin and other cryptocurrencies. Swiss-based Falcon Private Bank was the first of private banks to allow its clients to invest in cryptocurrencies. Facebook launched a cryptocurrency index in May, the Intercontinental Exchange- which owns the New York Stock Exchange and other global market places- recently announced that it was setting up a new firm called Bakkt. It will be launched this November and will offer a federally regulated market for Bitcoin. Dutch private bank ING is exploring blockchain technology- the distributed ledger- behind bitcoin and other cryptocurrencies. HSBC executed an international food and agriculture trade transaction using R3’s Corda scalable blockchain platform in May 2018.

  1. Now is a good time to buy

Because bitcoin prices have been falling, it is a good time to buy and cash in the profits at a later day. Because bitcoins have reached both record highs, and record lows, there has been a decrease in volatility, making it a good replacement for fiat currencies. The bitcoin price in 2017 showed more stability, than gold, Japanese yen and the US stock index, which are key indicators of the health of the global economy.

  1. They are going mainstream and are set to replace paper money

Several economies are shifting towards digital payments. This means the use of paper money is slowly fading as countries aim to shift towards a cashless economy. Sweden is looking to build its national e-krona. In Venezuela the price of oil is linked to cryptocurrencies due to tough economic sanctions and an unstable Bolivar currency.

So it is safe to say the answer to the question “are bitcoins a good investment” is that they indeed are. Whether they are reaching highs seen in December 2017 of $20,000, or lows of $5,000, they either give potential for large amounts of profits to be made, or can be bought at low prices and can be cashed in for a greater amount at a later date.

Read Private Banker International’s commentary to find out more about the benefits of cryptocurrencies 

 

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Wednesday. The industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Private Banker International