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Cryptocurrency

Answering the big Bitcoin question – buy, sell or hold?

Bitcoin is characterised by booms (when the price goes up) and busts (when the price falls) that have been sources of major criticism.

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BTC wallets, Bitcoin users rise in Nigeria despite Senate, CBN campaign against it, Answering the big Bitcoin question - buy, sell or hold?, Bitcoin hits a 12-month low, Bitcoin price under pressure, stays under $7000, How to protect your bitcoin from hackers, Bitcoin Whales Gathering More Bitcoins, Waiting For the Bullish Run, Bitcoin is scarce, entities, individuals hold for long term, How Cryptocurrency-Based Companies Like Patricia are Shaping the Digital Currency Market in Nigeria

There’s no other way to say this – the price of Bitcoin is volatile. The world’s most popular cryptocurrency is characterised by booms (when the price goes up) and busts (when the price falls) that have been sources of major criticism. This volatility puts many West Africans off but it is also one of the main reasons why others invest in Bitcoin, hoping to buy when the price is low and cash-in when the price is high.

This may sound like a very simple and straightforward process if you are an experienced commodities trader. However, for many, it is anything but that. Working out when to buy and when to sell or hang on to Bitcoin can be a rather complicated process to navigate.

Bitcoin users rise in Nigeria despite Senate, CBN campaign against it 

A pile of bitcoins

People in West Africa buy and sell Bitcoin for a variety of reasons. When the price of Bitcoin increases, some fear they are missing out on an opportunity to make a fortune. So they start buying Bitcoin, hoping the price will continue to rise.

On the other hand, fear, uncertainty and doubt (FUD), as well as price dips also prompt many to sell because they think the price may drop even further. So they sell their Bitcoin because they don’t want to lose what they’ve already invested. Whatever your reason for investing in Bitcoin, the question of whether and when to buy, sell or hold is one that must be addressed head on.

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Commit for the long term

One way to address this question is to be committed for the long-term. Committing to investing a set amount of money each month, for example, makes it easier for you to benefit from Bitcoin price averaging and limit the impact of volatility and market movements. This also means the amount of Bitcoin you acquire will vary from month to month. But, over time, you will average out and will not need to worry much about the so-called perfect time to buy or sell.

[READ MORE: Bitcoin users rise in Nigeria despite Senate, CBN campaign against it)

Bitcoin is sensitive to various factors

It is also worth bearing in mind that no boom or bust lasts forever. The price of Bitcoin, like any other asset class, is sensitive to a variety of factors, including the state of the global economy and statements from well-known business and tech personalities. One statement in favour of cryptocurrencies could send prices rocketing and a statement against could bring it back down.

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Much of the recent volatility, for example, has been a result of the negative sentiment across all markets caused by the global geopolitical news flow. These negative sentiments have also had an impact on all asset classes. With the current uncertainty surrounding global geopolitics, many investors have placed a small amount into Bitcoin as a hedge.

New asset classes can be volatile

It is important to remember that cryptocurrencies are still relatively new as an asset class, so there will always be a higher level of volatility compared with traditional and more established forms of trading. It is also important to remember that as the benefits (especially to developing markets that are disadvantaged by traditional financial services systems) become clearer, more people and businesses will hold the coins for their utility value. This will reduce speculation which should, in turn, reduce volatility. As more countries introduce regulation and the functionality of the coins increases, this should also positively impact the stability of the price of Bitcoin.

Answering the big Bitcoin question - buy, sell or hold?

Whatever approach you take to investing in Bitcoin, the importance of responsible investing cannot be overstated. Don’t ever invest more than what you can afford to lose and don’t believe anyone who tells you they can guarantee returns – this is usually a scam.

Spend time understanding your personal preferences and the risks associated with your investment. Once this has been done and you’ve thoroughly researched crypto, you should be well-placed to take advantage of the opportunities presented by cryptocurrencies like Bitcoin.

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Owen Odia, Country Manager for Nigeria at Luno

Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform. To get your articles on Nairametrics, kindly send an email to [email protected] and we will publish it within 24 hours of approval by our editorial team.

1 Comment

1 Comment

  1. alicejenifferze

    March 17, 2020 at 8:48 am

    Thanks for sharing! of course, bitcoin is sensitive to various factors. I think that the impact of coronavirus lets to the massive fluctuation in Crypto Market.

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Cryptocurrency

120 million XRP worth $76 million moved by a large entity

A large entity moved 119,999,980 XRP (75,551,782 USD) from an unknown wallet to Coinbase, a few hours ago.

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ripple cryptocurrency, XRP

The third most valuable crypto by market value, XRP has become the favourite of institutional investors lately, hinting that there may be more than meets the eyes.

Data, however, retrieved from Whale Alert revealed a large entity moved 119,999,980 XRP (75,551,782 USD) from an unknown wallet to Coinbase, a few hours ago.

READ: Buying signs: Ethereum’s total coin supply held off exchanges continues to rise

  • Wealthy crypto investors seem to be upping their game last quarter of, 2020, as regards moving XRP – the third most valuable crypto by market value, as lately seen by Nairametrics.
  • Many crypto experts anticipate the movements of such crypto are coming from major stakeholders of Ripple, on the bias some of these wallets contain a significant amount of XRP.

READ: ValuAlliance distributes value fund of N10 per unit for H1, 2020

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At the time of writing, XRP was trading at $0.628191 with a daily volume of $11 billion. XRP is up 1.16% in the last 24 hours, with a market capitalization of $28.5 billion. It has a circulating supply of 45,334,295,892 XRP coins and a maximum supply of 100,000,000,000 XRP coins.

What you should know: Ripple is a privately-held fintech company that provides a global payment solution via its patented payment network called Ripple Network (also known as RippleNet).

READ: Nigeria’s non-oil exports increase by 100%

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XRP still remains the only crypto gaining traction among global banks as Japan-based Mitsubishi UFJ Financial Group, with assets of more than USD 2.8 trillion, announced in November 2018 that, in cooperation with Ripple, it would provide an international money transfer service on the payment corridor from Japan to Brazil

READ: Tether opens up 300,000,000 USDT

Why are whales buying?

Economic historian, Barry Eichengreen, gave a detailed analysis of why cryptos should not just be considered for speculative reasons, as leading crypto assets have shown characteristics of being tangible assets.

“I don’t think that thinking about crypto as speculative investments, is really a long-term viable business model. Speculative investments have come and gone throughout history. Tulips came as a speculative investment and they went. Digital assets that provide actual tangible services like cross-border payments are the ones that are likely to have legs,” Eichengreen said.

READ: Ripple suffers highest day percentage loss since September 3

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Barry went on to explain why crypto has become the new digital gold.

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He said, “Gold doesn’t really have any intrinsic value. People [believe] it will hold its value because other people value it. There is, from that point-of-view, a parallel with cryptocurrencies. People pay actual U.S. dollars for it because they think other people will value it and pay actual U.S. dollars for it.”

READ: Whales are buying XRP, Ripple becomes world’s 3rd most valuable crypto

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Cryptocurrency

Bitcoin is highly volatile, illiquid, supports digital Euro – European Central Bank

The ECB leader has acknowledged the gains of having blockchain technology in play but is critical about Bitcoin and other Cryptos.

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European Central Bank plans Crypto Euro  IMF reiterates the need for Nigeria, others to completely ditch fuel subsidy

European Central Bank (ECB) leader, Christine Lagarde, is leading the campaign for a digital euro but doesn’t see the flagship crypto, Bitcoin, and other cryptos as ideal for payment.

The ECB leader acknowledged the gains of having blockchain technology in play, but was critical about Bitcoin and other cryptos, particularly on the bias that it’s too volatile to be used in making payments.

READ: New CBN Circular: CBN confirms only Banks can pay IMTO dollars

“The main risk lies in relying purely on technology and the flawed concept of there being no identifiable issuer or claim. This also means that users cannot rely on crypto-assets maintaining a stable value: they are highly volatile, illiquid, speculative, and so do not fulfill all the functions of money,” Lagarde said.

In this COVID-19 era, Lagarde has declared her support for the digitalization of the Euro, elaborating deeper on what a digital euro could do, such as providing its citizens unrestricted access to money that is backed by a central bank, and allowing the Euro geopolitical area to maintain its monetary status quo.

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READ: Africa’s internet economy has the potential to reach 5.2% of the continent’s GDP by 2025 – Goggle/IFC

READ: Nigeria loses N3.5 trillion to post harvest loss annually – Farmcrowdy boss

“It could be important in a range of future scenarios, from a decline in the use of cash to pre-empting the uptake of foreign digital currencies in the euro area. Issuing a digital euro might become necessary to ensure both continued access to central bank money and monetary sovereignty.

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“A properly designed digital euro would create synergies with the payments industry and enable the private sector to build new businesses based on digital euro-related services,” Lagarde added.

READ: 100,000 tons of cocoa stranded at ports due to CBN documentation – Cocoa exporters

What you should know

  • Some weeks back, Christine Lagarde gave a strong indication that the ECB could create its cryptocurrency within a few years, in what would be a systematical change to the euro zone’s financial system.
  • Lagarde hinted that it could take two to four years before the project begins, as it would address concerns over privacy, money laundering, and the technology involved.

READ: U.S investment giant, with $295 billion assets plans to buy Bitcoin

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Cryptocurrency

Bitcoin has caught our attention – BlackRock

Blackrock CEO, Larry Fink recently revealed the flagship crypto, Bitcoin is on his company’s radar

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Bitcoin on high demand, hits 2-year high, trading $17,000

BlackRock CEO and leader of the world’s biggest asset management firm, Larry Fink, recently revealed that the flagship crypto is on his company’s radar amid the rapid gains recorded by Bitcoin this year alone.

Speaking recently at the Council on Foreign Relations alongside Mark Carney, former Governor of the Bank of England, Fink said, “Bitcoin has caught the attention and the imagination of many people. Still untested, pretty small relative to other markets.”

READ: List of cryptos U.S investment banks are buying quietly

“Can it evolve into a global market? Possibly,” Fink added.

What you should know

  • BlackRock is the world’s biggest asset manager with about $7.4 trillion in assets under management as of the end of Q4 2019.
  • Its massive size allows it to do what no other asset management on planet earth can do.

READ: List of Cryptos rich individuals are investing in

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Recall a few weeks ago, BlackRock top executive, Rick Rieder, gave reasons for his bias towards Bitcoin overtaking gold as the go-to store-of-wealth asset.

“Do I think it will take the place of gold to a large extent? Yeah, I do, because it’s so much more functional than passing a bar of gold around,” Rieder said.

READ: CRR Compliance: Banks suffer another N226 billion in CRR debits

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Also, the BlackRock CIO of Fixed Income buttressed his bias on why Cryptos are here to stay, taking into account its role in payments among the world’s millennials:

“I think cryptocurrency is here to stay and I think it is durable and you’ve seen the central banks that have talked about digital currencies. I think digital currency and the receptivity, particularly millennials’ receptivity to technology and cryptocurrency is real. Digital payments systems are real, so I think Bitcoin is here to stay.”

READ: Africa’s internet economy has the potential to reach 5.2% of the continent’s GDP by 2025 – Goggle/IFC

However, the leading asset manager, BlackRock, doesn’t outrightly own any crypto yet. It is indirectly exposed to digital assets through MicroStrategy, a business intelligence company that has most of its savings in Bitcoin.

The world’s largest asset manager is the largest MicroStrategy shareholder, with a 15.2% stake in the firm.

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