Expert reveals when you should buy Bitcoin 5 Jan, 2021 11:56 PM 5 minutes to read Bitcoin remains volatile in the current market conditions.Photo / Getty Images news.com.au By: Kathy Skantzos After surging past AU$42,000 (NZ$45,000) per coin for the first time in history, Bitcoin has started to pull back.Will the world’s most popular cryptocurrency plummet like it did in the past or continue to rally at high levels? Australian market analyst Kyle Rodda has been watching closely at its activity.”Last night’s price action showed how wild trading Bitcoin can be in the short-term,” he said.
“It shed as much as around 17 per cent yesterday after coming close to that US$35,000 (AU$48,690) level, before bouncing back late in US trade once again.” Advertisement Mr Rodda is sceptical about how long this surge will last.Read More Juha Saarinen: Will new rules legitimise cryptocurrencies? – NZ Herald “We are still seeing price driven mostly by momentum and speculation,” he told news.com.au.
“There’s a level of popular hysteria in the price at the moment, which I think suggests the rally we’ve seen in the past fortnight is on shaky ground.” Mr Rodda emphasised that it’s important to have a long-term view of any asset and not get caught up in the short-term mania.”Like any asset in financial markets, and particularly ones driven so much by sentiment, Bitcoin can look overbought in the short-term, while still possessing a reasonable case to buy or hold onto it in the long-term,” he explained.”These sorts of rallies tend to peter out when the mood of the market shifts, and speculators grow tired and either pull their profits or cut their losses,” he said.”In saying that, in a financial universe where liquidity is ample, monetary policy loose, fiat [government-backed] currencies debased, and investors are looking for alternative stores of value, having some exposure to crypto currencies is not a bad bet.” SHORT-TERM VS LONG-TERM GAINS Mr Rodda believes the recent surge we’ve seen will eventually flatline but maintains the view that Bitcoin is one to watch for the long-term.Advertisement Advertise with NZME.”Are we heading for a crypto-crash a la 2018? My personal view is I think we’ll see a correction in price that will see Bitcoin back in the low 20,000s to mid-10,000s in the short-term, so in the next few weeks to months,” he said.
“In the longer-term, I see the outlook being constructive for Bitcoin.” He added it’s important to understand the risk factors when investing.”The key lesson for traders or investors is to understand the risks of a very volatile asset and exercise caution,” Mr Rodda said.”If buying up here to hold for the long-term, then showing patience and a relatively high tolerance for pain is required.There’s also a lot of sense in waiting until the exuberance comes out of the market before making a foray into Bitcoin and other cryptos.” IT COULD CONTINUE TO SURGE Advertisement Advertise with NZME.
Australia head of global cryptocurrency company Luno, Byron Goldberg, told news.com.au that the recent surge in Bitcoin could be just the beginning of a wild ride for cryptocurrency in 2021.”Search trends for Bitcoin are only starting to rise, still only a fraction of what they were at the peak of the 2017 high, implying we are only at the beginning of the bull run,” he told news.com.au on Monday.”This bullish news also relieves the tension that this rally is a momentum rally being lead by irrational speculators.” He added Bitcoin isn’t the only cryptocurrency that’s surging, as he watches other cryptos such as Ethereum, Ripple, Litecoin and Tether rally in the market.”It seems like 2021 should be a good year for Ethereum too,” he said.
THE SURGE OF BITCOIN Advertise with NZME.
Before the turn of the New Year, Bitcoin reached record highs of more than A$27,000 in early December 2020, surpassing 2017’s all-time high of A$26,500.The digital coin has more than quadrupled in value since the start of 2020, with the currency’s total value now past $US600 billion ($A780 billion).According to Forbes, the latest bull run began in October after PayPal announced it would begin offering Bitcoin and cryptocurrency support.
Meanwhile, Citibank and JPMorgan have also been making bullish Bitcoin forecasts.Since mid-October, the Bitcoin price has been rapidly climbing from A$15,500 to its current price of around A$42,000.Investors couldn’t contain their excitement when Bitcoin surged from $US32,0000 ($A43,000) to $US33,000 ($A44,200) in a less than 45 minute trading window this week.Advertisement Australian cryptocurrency exchange provider Binance Australia believes crypto becoming more mainstream is inevitable as the world continues to progress digitally.WHAT EXACTLY IS BITCOIN? Bitcoin was created by a mystery person or group under the name of Satoshi Nakamoto in 2009.The cryptocurrency exists without a central bank and can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.There is speculation Bitcoin could become an alternative to gold – the traditional safe-haven investment.A leaked report from Citi in December referred to the cryptocurrency as “21st century gold”.
Advertisement Advertise with NZME.”A large part of what we have seen for Bitcoin in the last 12 months is a market looking for alternative stores of value and new ways to diversify in a world of zero per cent interest rates and ultra-loose monetary policy – buying Bitcoin as if it were ‘digital gold’,” Mr Rodda had told news.com.au on Monday.- News.com.au.
