Bitcoin Gains $1000 In 40 Minutes, Crypto Investor Categories Defined
Happy Thursday to you, crypto fanatics! For a second week in a row we bring you good news about an all-but-impending reversal of the downtrend that has plagued investors for the year thus far. We explain why decreasing volatility in bitcoin is a good thing, how crypto investors can be described using three distinct categories and present a real-world example of an investor who moved through all three categories with a resounding tale of success. Just remember that, in spite of the market turmoil that has dominated the first quarter of 2018, things aren’t nearly as bad as they seem, and are perhaps even getting better for the world of blockchain-based technologies.
BTC, Alts Once Again on the Rise
Bitcoin surged to a two week high yesterday, leading a pack of cryptos that were strongly in the green. Thanks to an incoming pump on rather-large volume as of early morning Thursday, which saw prices shoot up over $1,000 in the course of under 40 minutes, the price of BTC is now up 14% for the week, though it still remains 14% down for the month. The sudden pump had the added benefit of pushing the total coin market cap above the $300 billion mark for the first time this month.
To help put things in perspective, bitcoin is still up close to 40% over the last 6 months, while the S&P500 stock index is up a measly 4% over the same period of time. For those who bought in at any point from December 2017 to the present, this morning’s gains may not seem impressive or helpful, but they could be interpreted as a sign that things may finally be turning around.
The price of bitcoin has refused to budge very far in either direction throughout the last 3 months, suggesting that some semblance of stability might finally be arriving in the life cycle of bitcoin. Indeed, the relative volatility of BTC fell to its lowest levels of the year this week. While this might not be exciting news for traders who depend on massive price swings to incur profits, it helps bitcoin’s case to act as a currency, instead of just a vehicle for speculative investment. With over 17 million bitcoins now in existence and literally hundreds of exchanges and other methods through which to purchase it, BTC has matured to become the more liquid asset that Satoshi Nakamoto once envisioned it to be.
Another encouraging indicator is bitcoin’s sliding percentage of dominance of the total market cap space this month, which suggests that investor appetite for riskier crypto investments may once again be on the rise. A falling percentage of bitcoin dominance means money is moving into cryptos other than BTC — regardless if the price of BTC is rising or falling. As investors regain confidence in the potential, continued success of the crypto markets and blockchain technology in general, altcoin market caps are inflated accordingly, and overall investor attitude can once again be driven by risk instead of fear.
Barclays Declares Brunt of Crypto Craze Over
According to British multi-bank/investment firm consortium Barclays, cryptocurrency investors can best be classified in three distinct categories: susceptible, infected and immune. Susceptible investors are defined as those who are familiar with cryptocurrency and are on the fence of making their first purchase(s); perhaps they are waiting for an entry point or their latest paycheck to hit their bank account. Infected investors are those who have already been bitten by the crypto bug and are currently in it to win it. Immune investors, on the other hand, are those who decided to get out of the game or are otherwise content with their crypto holdings, no longer pursuing short- to medium-term trading activities.
As the price of BTC remains down over 50% from its all-time highs set last year, Barclays is under the impression that the “speculative froth phase” of cryptocurrency investment popularity is now a thing of the past, with the mania seen during the peak of the bubble unlikely to be re-created in the near future. This means that very few susceptible investors remain (as everybody and their mom, so the saying goes, has now at least heard about cryptocurrency in some regard), infected investors are now beginning to decline in number, and immune investors are becoming the norm.
Case Study of a Successful Market Gambler
A real-world example of an investor that went through all three stages as defined by Barclays is the case of Ben Arnold, of Honolulu, Hawaii. In his early 30s, Arnold caught the Crypto Bug in May 2017, before the price of BTC and ETH had exploded, but were definitely more than blips on the radar of the mainstream media. Having been an avid gambler (and part-time professionally) for year prior, Arnold saw the potential for cryptocurrency to catch on and was inspired by the price movements he had witnessed thus far.
“I just wanted the American Dream: time and money,” Arnold said, about his initial motivations to invest in the crypto markets, hopping the fence from susceptible to infected investor category. Not one to pussyfoot around bets he has a strong belief in, he put his gambling spirit and instinct to work to secure a $5,000 loan and used it to purchase Ethereum (ETH), between the prices of $200 and $500 a coin, cashing the majority of them out at around $1,000 in December 2017. When asked how he knew the timing was right to collect profits, he responded that he relied on a “gut feeling,” and that he was pretty much a “hit-and-run type of gambler.”
Arnold’s decision turned out to be extremely well-timed, and he used the proceeds to not only buy a little bitcoin here and there but also pay for ordinary life expenses, as well as fuel a few trips to Las Vegas — one of his vacation destinations of choice. Nowadays, Arnold has transitioned to the immune phase, still holding a bit of BTC and ETH, but not necessarily keen on jumping back in like he once did. What would inspire Arnold to get back into the game? “Seeing a sharp spike… like a $10,000 gain overnight,” he says would do the trick. Until then, Ben is happy with his crypto investment experience thus far, waiting for that perfect moment, before beginning the cycle anew as a member of the susceptible investor category.