2017 was the year the cryptocurrencies exploded into the mainstream, with the likes of bitcoin and ethereum seeing exponential rises in value. A significant reason for this boom was that speculation and media hype drove up demand, causing what was to be a huge bubble and high levels of disappointment for some investors.
Cryptocurrencies fell in 2018 almost as quickly as they rose, but they may not be dead and buried. Given that they are now well and truly on the investment map, here are some considerations about a possible cryptocurrency resurgence.
One of the behemoths of the investment world, Wellington Management, has declared its interest in companies which are involved in cryptocurrencies. Although they are still exercising caution in their consideration of such companies, their interest alone speaks volumes about investor sentiment towards the cryptocurrency world.
When such investment firms, who have a wealth of experience handling significant amounts of client capital, consider cryptocurrencies as an investment, there’s a high chance that they could be about to surge in value.
It is worth also looking at the factors which influence the value of cryptocurrencies. Like all assets, supply and demand governs their price, but unlike most other assets, cryptocurrencies are decentralised and unregulated, meaning that there are no caps on how much their value can rise or fall by.
As such, if huge firms were to invest in the likes of bitcoin, then its value certainly has the potential to rocket, and it would also be further boosted by regular investors looking to cash in. Also, if more businesses around the world start to accept cryptocurrency payments, then this could also contribute to huge leaps in their value.
A Word of Caution
Although it looks as though cryptocurrencies could well be on the up, 2017 taught the investment world that nothing is ever guaranteed. Any hint of regulation from governments could well serve to damage investor confidence, and bring cryptocurrencies crashing down once again.
So, even if cryptocurrencies do begin to shoot up in value, there is no telling how consistent or sustained any gains may be. As such, investors and investment firms will still have to be cautious when betting on bitcoin.
It seems as though the cryptocurrency boom may be far from over, and 2017 could have simply have been a precursor to a much greater boom in the near future. Although nothing is certain, the fact that big money firms are now exploring cryptocurrencies could well give cryptocurrency investors a lot to be excited about.