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Will 2019 Be A Year Of Truth For Bitcoin?

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All markets get a fresh start in the New Year, and for Bitcoin and the other tokens in the digital currency asset class, 2019 could not come soon enough. Each January traders and investors scour the markets looking for cheap or overpriced assets which give rise to opportunities for profits. In the world of trading, the more volatility an asset displays, the better as traders tend to gravitate to those markets that offer the widest price variance.

In 2010, while few market participants were watching, Bitcoin emerged on the scene at six cents per token. In late 2017, the cryptocurrency traded to over $19,000 per coin and Bitcoin was a front-page item in the financial press. In 2018, gravity was a powerful force that caused the price to decline to under $4000 by the end of the year. 

Source: CQG

As the one-year chart highlights, Bitcoin fell to a low at just under $3200 in December 2018 and the final price for the year was at $3692.75. On Tuesday, January 2, 2019, the price of the digital currency was trading at $3.872.76, $180.01 or 4.9 percent high since the end of 2018. While the price has gained so far in 2019, there is lots of volatility on the horizon for Bitcoin and the 2076 digital currencies in the market. Bitcoin has a market cap of around $67.58 billion, but the asset class represents a total of $133.817 billion as of January 2. Bitcoin is the leader of the pack with 50.5 percent of the value, and most of the tokens follow its price path. In late 2017, the market cap of the asset class rose to over $800 billion.

In December 2018, Bitcoin traded in a range from around $3200 to $4200 which makes it one of the most volatile assets available which attract traders like a magnet. At the same time, its decline from $19,000 puts the cryptocurrency in a position that is attractive for investors seeking value for the coming year.

Bitcoin and the other digital currencies have given birth to the widely accepted blockchain technology that businesses around the world, including the financial sector, continue to adopt. When it comes to the prices of the tokens, 2019 may turn out to be a make or break year for their future.

The bull market that lasted for seven years from 2010 through 2017 and vicious correction in 2018 may have destroyed lots of value for those who were late to the party in late 2017. However, market participants who purchased Bitcoin in early 2017 when the price was below the $1000 level may have opportunity losses but are still sitting on significant percentage gains.

As we move forward in 2019, the debate between those who believe cryptocurrencies represent the future and detractors like the Chairman of JP Morgan Chase Jamie Dimon and Warren Buffett will continue. In 2018, Mr. Buffett said Bitcoin is “probably rat poison squared.” The price action over the coming months and throughout 2019 will tell us if these assets have a future or if they will continue to fade into the annals of history. 2017 was a year of incredible gains. 2018 was a year where the foundation of the new market came into question. When it comes to 2019 the best bet for Bitcoin is that price volatility will continue, and the path of least resistance for the price of the cryptocurrency will determine its relevance in the years ahead.




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About the author

Andrew Hecht is a commodity and options trader and analyst. He spent nearly 40 years on Wall Street, including two decades at Phillip Brothers, later Salomon Brothers and part of Citigroup. He executed some of the largest trades in precious metals and bulk commodities as well as booking ships, armored cars, and trains for transport. He has worked with the United Nations and maintains a global network of sources.

Andy is a top contributor at Seeking Alpha and other sites, a university guest lecturer, and consultant. His radio show, "The Commodities Hour with Andy Hecht," airs Tuesdays and Thursdays 5-6 PM EST on TFNN. Andy’s first book How to Make Money with Commodities, has received excellent reviews.  

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