Bitcoin’s recent price surge after a five-month low is just the latest reminder that when an investor includes digital currencies in their portfolio, they sign on for whiplash-inducing schizophrenia.
Most analysts attribute bitcoin’s 15% price hike in October to news that China may ease its strict cryptocurrency and blockchain policies first enacted in 2017. Right on cue, financial pundits reacted with sunny forecasts ahead for bitcoin and many other popular cryptocurrencies.
Yet only a month earlier, investors were greeted with much more circumspect analysis, questioning whether bitcoin was “dead.” For the record, this marked nearly the 400th time a Bitcoin obituary has been published in almost a decade.
All the zigging and zagging news — despite BTC’s slow and steady ten-year climb — says a lot more about the overall anxiety and confusion that continues to surround cryptocurrencies than it does about any coin’s sustainability.
Granted, it is easy to understand why investors might be feeling anxious when surveying the current landscape. Despite the recent surge, bitcoin has had a pretty sluggish year. And overall, investments in crypto and blockchain projects are down significantly when compared to last year.
Recent regulatory actions haven’t done much to quell investor angst either. Quite the contrary.
In October, the IRS announced long-overdue new tax guidelines for cryptocurrencies. However, most investors found these new guidelines simultaneously clarifying, confusing, upbeat and disheartening.
Also, when the SEC recently shot down proposed plans to launch a bitcoin exchange-traded fund, many treated it as another step back on the road to mainstream acceptance for digital currencies.
Despite these speed bumps, cryptocurrencies continue to move forward. There are more than 2,500 digital currencies for investors to choose from.
Not all of these are worthy of consideration. Many operate in the murkiest corners of the internet…