Bubble Or Not: The Smart Way To Make Money With Bitcoin.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Research produced by Cambridge University estimates that in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.

The original intended use for Bitcoin was as a digital currency, or a medium of exchange. However, most users are not exchanging their Bitcoin for products and services, but rather making buy or sell decisions on Bitcoin according to their expectations about price fluctuations. Most people are investing or trading Bitcoin, not using it as payment method.

There is a lot of discussion among investors regarding whether Bitcoin is a bubble or not. When you look at the tremendous price increases over time, it’s easy to make the case that investors’ behaviour in the Bitcoin market is even more extreme than the behaviour observed in many of the most extraordinary bubbles in history.

When it comes to Bitcoin, following demand trends is a much sounder approach than trying to estimate a fair valuation for the crypto asset. Quantitative trend following systems such as the ones described above work remarkably well across different asset classes, even when those markets go through massive bubbles. For this reason, implementing a quantitative trend following method to Bitcoin could be a smart way to play such an explosive market.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it . I have no business relationship with any company whose stock is mentioned in this article.

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