Bitcoin is not for everyone. The markets swing wildly on a daily basis and holding any amount of Bitcoin can be a real stressful experience.
Sure, there have been winners when it comes to Bitcoin, and if you had invested more than 12 months ago, you will have made a good chunk of money.
Let’s give you an example of how volatile Bitcoin can really be
Below is the Bitcoin price chart for the past 12 months (11th July 2017 – 11th July 2018) – Source Coinmarketcap.com
For those who don’t understand price charts, lets dig a little deeper into what this all means:
The line on the chart represents the Bitcoin market price over time in USD. The price changes on a daily basis and if you held Bitcoin, the amount it was worth would also fluctuate depending on the price.
What many people don’t understand about Bitcoin is that you don’t have to own a full Bitcoin, can be divided at the moment to 8 decimal place. So the minimum amount of Bitcoin one can own is 0.00000001 Bitcoin which at the current price is worth $0.000064.
For our example let’s say you owned 0.1 BTC (1 10th of a bitcoin). The Bitcoin price is $6429, so your 0.1 BTC is worth $642.9.
Now let’s go back over the chart and see just how much the value can fluctuate on a daily basis.
The red circle on the above chart shows the current all time high price on 17th December 2017 of $19,345. The black circle is the price today, $6429.
Of course that’s quite a gap, almost 7 months.
If you had bought your 0.1 BTC on 17th December at the high price, it would have cost you $1,934.
You’d be more than slightly pissed considering it’s now worth just $642, which is 64% less than what you paid for it.
If however you had bought your 0.1 BTC 12 months ago, you would have bought it for $240 because the Bitcoin price on 11th July 2017 was just $2,404. You would now be able to sell for $642 which is 167% more than what you paid for it.
How much does Bitcoin fluctuate daily?
Let’s reduce the above chart to the past 3 months to get a better feel of how Bitcoin fluctuates on a daily basis.
The 2 black circles marked on the above chart indicate the 7 day period between 11th June and 18th June 2018.
Although it doesn’t look like much of a price difference on the chart, the price difference between these two points is around $1000.
On the 4th June, the price was just above $7700, and on the 11th June it had reduced to just above $6700.
On these two dates, your 0.1 BTC would have been worth $770 and $670 respectivly, a $100 loss in just 7 days. If you had owned a full Bitcoin, the value would have reduced by $1000.
This kind of fluctuation happens every week, sometimes by less, often by a lot more.
For the week in question, we’ve broke down the daily average Bitcoin price during that week.
4th June – $7700 – Value of your 0.1 BTC = $770
5th June – $7500 – Value of your 0.1 BTC = $750
6th June – $7600 – Value of your 0.1 BTC = $760
7th June – $7700 – Value of your 0.1 BTC = $770
8th June – $7590 – Value of your 0.1 BTC = $759
9th June – $7600 – Value of your 0.1 BTC = $760
10th June – $7300 – Value of your 0.1 BTC – $730
11th June – $6700 – Value of your 0.1 BTC = $670
As you can see the price does fluctuate wildly and this week was picked at random, other weeks we see even wilder volatility.
Is now a good time to invest in Bitcoin?
As previously mentioned, the Bitcoin price at the moment is around 64% lower than it was at the all time high price back in December.
To gain a better perspective, let’s go back to 2014 when a similar pattern can be seen on the Bitcoin price chart.
The above chart shows the Bitcoin price for between June 2013 and June 2014.
The peak price in December 2013 was $1143, an enormous achievement back then considering just 2 months prior is was only just staying above $100.
Over the next few months the price dipped over 65% to a low of $394. That’s eerily similar to what we’re seeing currently.
Of course past performance is no true indication of future success though, but the pattern is an interesting comparison.
The above chart shows the Bitcoin price for the end of 2017. We see that back in July, the price was fluctuating around the $2500 mark, a really high price at the time.
After this, although there were relatively small dips along the way, the price surged enormously toward the end of the year.
By September, the price had exceeded $4000.
By the end of October, the price had broken the $6000 barrier.
The end of November saw Bitcoin cross $10,000, a monumental achievement and sparked a wave of mass hysteria and media attention.
And December of course saw the all time high of $19,345.
In just the last 5 months of 2017, the price increased by 673% ! If you’d have bought your 0.1 BTC in July 2017, you’d have got it for $250.
If you’d then sold in December at the ATH you would have gotten $1934 for it. In 5 months you would have made $1684 profit on a $250 investment.
Although the current Bitcoin price seems dire and from a new potential investors perspective, it may seem like a terrible investment, if there were ever a perfect time, now would be it.
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