BITCOIN AND MARKET RISK
Introduction
Two weeks ago, I tried to answer the question "Can a Christian buy or sell Bitcoin and other cryptocurrencies? This question may have limited many Believers who may be interested in digital currency, especially two years ago, when the hype for Bitcoin was everywhere.
The truth is that the Bitcoin and digital currency market is not meant for all comers. It is not the same as the regular stock market with limited liability companies, regulated and controlled by the Stock Exchange authorities. The stock market has rules and regulation handed down, which the parties involved must comply with. There are responsibilities also, like rendering accounts, which the companies must comply with. That is not the same with cryptocurrency exchanges.
One of the primary functions of the stock exchange is to raise funds for the companies through the initial issue, Public and right issues to the public. The digital currency exchanges do not raise funds, rather they mainly engage in buying and selling of cryptocurrencies only. The cryptocurrency companies do their own marketing and eCommerce integration of their currency, which positions the currency for the global market, eCommerce etc.
There are financial control and regulations that must be followed by listed companies like rendering quarterly, half-yearly and annual accounts and reports. These reports show among other things, the company's financial and operational records and achievements within a period. Their new products, discoveries and market penetration etc, which goes to inform the value placed on their shares on the market. This is not the case with digital currency valuations.
The digital currency market is not exactly the same as stock exchange trading and business. Digital currency prices are determined mainly on demand. The currencies in high demand are those used for payment and settlement of eCommerce transactions. It is not with every digital currency you can pay for your groceries, flight tickets and even school fees.
The digital currencies used for eCommerce transactions, settlement of bills enjoy better prices. Let's look at the top ten in the last two weeks.
# Name Market Ca Price (24h) Circulating Supply
1 Bitcoin $128,237,968,752 $7,083.34 18,104,175
2 Ethereum $15,404,927,367 $141.42 108,930,754
3 XRP $9,254,025,238 $0.213668 43,310,265,523
4 Tether $4,111,900,737 $1.00 4,108,044,456
5 Bitcoin Cash $3,729,889,561 $205.28 18,169,663
6 Litecoin $2,755,000,684 $43.29 63,642,969
7 EOS $2,396,875,691 $2.54 944,554,983
8 Binance Coin $2,227,658,480 $14.32 155,536,713
9 Bitcoin SV $1,671,282,434 $92.50 18,068,415
10 Tezos $1,093,121,640 $1.66 660,373,612
Total Market Cap: $193,031,181,833
Analysis
1. The prices of digital currencies has been downward looking for the past two weeks. Only Tether, among the Top ten currencies that had a marginal price rise of $0.001553 to move to $1.00 per coin. Apart from that change, the remaining currencies suffered price losses - See table below.
2. The tenth position has a new name Tezos. Tezos gained price appreciation which pushed it ahead of Stellar. Tezos (XTZ) made it to the list of top ten coins by market capitalization during the week. At a time, when all the major cryptocurrencies are struggling to move up, it rallied about 10%, which is a positive sign.
One of the reasons for its price appreciation is that Hardware wallet manufacturer Ledger has added support for Tezos staking on its Ledger Live application — which allows users to send or receive tokens via a smartphone or computer.
3. Like the capital market, the digital currency market is affected by profit-taking common during the year ends, this December is not an exception. Digital currencies may continue to experience downward price movement till early February 2020.
4. There are currently 306 digital currency exchange floors around the world, instead of 72 exchanges I mentioned two weeks ago
5. The number of currencies trading increased in the last two weeks by 61, moving the total number of cryptocurrencies to 4,941.
6. Let's look at the price gain or loss within two weeks:
Top 10 cryptocurrencies as at Dec 16, 2019.
# Name Price Dec 03 Price Dec 16, 2019 Gain/Loss
1 Bitcoin $7,297.09 $7, 083.34 -$213.73
2 Ethereum $148.39 $141.42 -$6.97
3 XRP $0.219337 $0.213668 -$0.005669
4 Tether $0.998447 $1.00 $0.001553
5 Bitcoin Cash $214.89 $205.28 -$9.61
6 Litecoin $45.71 $43.29 -$2.42
7 EOS $2.69 $2.54 -$0.15
8 Binance Coin $15.21 $14.32 -$0.89
9 Bitcoin SV $99.23 $92.50 -$6.73
10 Stellar/Tezos $0.055771 $1.66
Among the Top Ten currencies, I am looking at, only Tether recorded a marginal price increase as at this morning 16th December 2019.
Global Market Trends
With a market capitalization of about $200Billion, the crypto market is still considered unstable and unpredictable. At its peak in December 2017, many institutional investors showed interest in investing in the market, but it is clear they are cautiously monitoring the market or still waiting to see how the market turns out.
With a market capitalization of about $200Billion, the crypto market is still considered unstable and unpredictable. At its peak in December 2017, many institutional investors showed interest in investing in the market, but it is clear they are cautiously monitoring the market or still waiting to see how the market turns out.
Meanwhile, people who like risky investment have continued to invest in the market, which explains why the number of cryptos has ballooned to 4,941 in ten years. Durability and longevity remain the concern of many investors, while fluctuation and high volatility is the concern of others, wishing to buy now and sell later. Even when investors buy at a point considered 'rock bottom', nobody can predict when such currencies will eventually rise again for such people to sell and recoup their investment.
Many stong coins have entered the market, but, they find it difficult to maintain momentum in the market for obvious reasons, thereby delaying the initial investor's payback period. This is one reason why investment in new currencies are considered very risky.
With the year coming to an end, many analysts are likely to forecast sky-high prices. But, listen to me, year-ends are traditionally profit-taking period as many investors would want to balance their books and prepare their portfolio for the coming year.
The total crypto market capitalization has been trading around $200 billion since Nov. 22. This shows that both the bulls and the bears are in a state of equilibrium.
There are the top five performers this period, which I have ignored because the Top ten currencies remain the most stable for investment and liquidity. A serious chase on top performers will lead an investor into the many bubble currencies that rise for one or two weeks and collapse for three months or more.
Generally, cryptocurrencies issued by computer and accessories producers and manufacturers do better in the market. This is because the company is on the ground to market their coins and integrate such coins into eCommerce. They also synergize their crypto with their other products and services to remain relevant in the industry.
Bitcoin Cash (BCH) has remain impressive all year round. It is placed in the fourth-best performer for last week, while remaining the number fifth in the Top Ten.
Conclusion
The digital market is huge and growing, but the uncertainty and risk remain high. The initial design of the developers of Bitcoin, was a currency that does not require a third-party regulation and control to operate. But, we all know the importance of regulation in today's world.
The market is not an all-comers game. If you are a Christian, you have the issue of doctrine to contend with. Should a Christian invest in such a high-risk business? The question to ask yourself is: If the risks involved are reduced, and drastically scaled-down, will you invest in Bitcoin?
By my own estimation, if you buy Bitcoin, either to store or use for eCommerce, there is a high risk of losing money due to price fluctuation, but, you cannot lose your entire investment. This may not be the same for so many other digital currencies.
Thank you for leaving your comments and contributions below.
FIRE...
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