Buyers of Bitcoin woke up one December morning last year to a troubling sight: the cryptocurrency dropped in value by more than 30 percent overnight after spending month after month climbing to new highs. The sudden drop has traders and perspective investors wondering if now is the time to buy or abandon ship.
The answer depends on how one views the Bitcoin price rollercoaster. If Bitcoin’s sliding value-and the accompanying down turn for other crytpocurrencies like Ethereum and Litecoin, and then another upturn-is a sign of the bubble popping, then it’s best to stay away. If the drop and recovery is just a temporary correction, then it’s time to get in on the market while the price has reached a new floor before it jumps back up.
“We have seen this market go up and down 20 to 30 percent the whole year dozens of times,” Ben Hortman, the founder and chairman of Bet Capital LLC, has said recently.
It’s tempting to view Bitcoin’s price fluctuation as an aberration, especially since the cryptocurrency has done nothing but increase in value for the majority of the year, but it’s important to note that volatility is nothing new for the digital currency.
Hortman also noted that there are still tons of variables in play that make these types of spikes and drops possible. “This is a very new digital asset and the market is still trying to assess how useful it is,” he said.
Hortman noted that regulatory concerns still exist and “will continue to cause fluctuations in price.” He also said scenarios like China deciding to crack down on cryptocurrencies are still in play and could impact the market in the short term. However, he viewed the long term prospects for the cryptocurrency as positive.
“Recent announcements by regulatory agencies in the U.S. and major financial institutions are all signals for continued growth, not a bust,” he said. “[Bitcoin] may become the next gold standard, being a better, more modern digital store of value, but it also has the potential to become much more.”
That understanding of Bitcoin and how its price has moved over time may be lost on new investors who have jumped into the cryptocurrency market after seeing prices skyrocket over the last few months. Bitcoin increased in value from under $1,000 at the start of 2017 to as high as $19,500 by the end of the year, and many people have tried to ride that wave.
“Right now is the best time to buy more Bitcoin,” Hortman advises. “After the start of the new year, I expect the prices to rebound even more. I am long on Bitcoin.”
He has a solid foundation to his optimism: “I’ve been doing this since 2011, and I’ve seen 4 times when the price spiked, then went down. But each time, when the ‘bubble’ burst, the price was always higher than it had been before the spike,” he said.
Hortman noted that anyone who has bought and held Bitcoin at almost any point has seen the asset appreciate in value. “Most experts think Bitcoin will continue to rise in value, and occasional dips allow new investors to enter the market, which generally supports long-term adoption and price growth,” he said.
“If you’re not in it for the long-haul, don’t buy,” he said. “If you genuinely believe in crypto’s long-term vision, and are willing to lose all your shirt to see that vision through, then I would advise getting involved. The true believers are going to hold.”