Insiders within the Bitcoin industry have reached a sad conclusion—regardless of what happens to the price of the Bitcoin in the short term, the long term trend for the currency/commodity should now be slanted downward. Insiders are selling off their positions and many of them are leaving the development process completely behind.
For short term traders, this is something to take note of. As Bitcoin prices drop, this does not mean that you should be taking long positions. In fact, it means the exact opposite. Prices are falling because of flawed fundamentals, and that means that even though prices are at relative lows right now, the currency is still overvalued. The price of the Bitcoin has been falling fast. At the time of writing this, it had fallen down under $380, after being at $453 just a week before. This, in a normal asset, could provoke a new round of buying, especially because it had been up over $1,000 not so long ago. But Bitcoin was, and still is, to an extent, an experiment. Experiments do not always go well, and this one, although well intentioned and even showing signs of success at times, is not on the good side of things. And unless something is done to correct the problem quickly, Bitcoin may become completely worthless.
What are the problems that Bitcoin faces? Security is a huge one. The fact that it’s supposed to be a decentralized currency, but is controlled by a small number of people is another. Technological problems are another issue. Behind the scenes fighting and disagreement on how to run the currency are causing even further instability. So, while the currency is a great idea in theory, there’s a good chance that Bitcoin is not the right way to address the problems of “too big to fail” economics.
There is a long term demand for decentralized, digital currencies. We see this popping up in online payment services like PayPal (which is now a publicly traded company), and credit card services set to up the ante in this arena. Even Apple is joining in with their digital pay service. However, because of the reasons mentioned above, and several others, Bitcoin is not able to keep pace with these services. Plus, all of those others are far easier to use. Even if Bitcoin were the cheaper choice (which is quickly turning out to not be the case), using your credit card or an online wallet is far more convenient. Sure, you might pay a little more, but in reality, that’s small when it comes to user experience. Bitcoin is flawed because it doesn’t work.
Many binary options brokers do allow you to trade Bitcoin still, and that’s a good thing for traders. If you can find brokers that still allow this, putting together a series of put options to take advantage of the falling price can turn a failed experiment into a profitable venture for you. But, it’s only a matter of time before the brokers figure out that this digital currency is doomed, and completely pull it from their sites. Unfortunately, when an asset becomes too predictable, it is no longer in the broker’s best interest to keep it on their site. This happens once in a while, although there’s probably never been something as drastically noticeable as what’s going on with Bitcoin right now. This is something to take advantage of if you can, or otherwise just stay far away from it.
There is a chance that this currency experiment could right itself, but for now, there are no signs that this will happen. Keep an eye open, but be ready to forget about Bitcoin if nothing happens soon.