In 2018, the price of Bitcoin went down to nearly $3,000, a large drop from its peak of nearly $20,000 in 2017. As the most popular crypto coin lost its popularity, Self-Directed IRA investors began losing their faith in the crypto market. Bitcoin’s sudden rise in 2019 comes as quite a surprise, and has many investors wondering what the future of cryptocurrency will bring.
Bitcoin in 2017
Bitcoin is the most well-known and oldest cryptocurrency, created in 2009 by an unknown person under the alias Satoshi Nakamoto. It wasn’t until 2017 that it became mainstream, during its historic surge to nearly $20,000. Its rise to popularity was driven largely by Self-Directed IRA and Solo 401(k) Plan investors, and retail investors. In 2018, Bitcoin lost 73% of its value with no appearance of resurging – earlier this year, Bitcoin was just above $6,000.
Yet, the crypto market is making a steady comeback. At the time of writing this article, the price of Bitcoin is almost $13,000.
Bitcoin is still a volatile and risky investment, therefore it is impossible to say where Bitcoin will go in the near future. However, the same can be said of every asset class, including stocks and real estate. While the future of Bitcoin is unknown, analysts, expert traders and investors have worked to determine why the price of Bitcoin has surged in 2019.
The Announcement of Libra
It is believed that the primary reason for Bitcoin’s comeback is due to Facebook’s introduction of its own crypto coin, Libra. In many ways, Libra has legitimized Bitcoin and other decentralized cryptocurrencies. When it launches in 2020 or later, Libra will be a stable coin, a digital currency that fluctuates less because it will be supported by established government-backed currencies and securities.
The creation of Libra has caused many investors to refocus their attention on the potential disruption that cryptocurrencies, such as Bitcoin, and its underlying technology, blockchain, could have on the financial industry as well as global commerce.
How to Hold Bitcoin & Other Cryptocurrency
While the details of Libra still remain relatively unknown, the most important detail is how an individual, business or investor will be able to hold Libra. Essentially, there are two ways to hold a cryptocurrency.
- Through an exchange, such as Gemini, or an exchange wallet
- With your own private wallet
Exchange / Exchange Wallet
If you buy cryptocurrency, such as Bitcoin, on a site like Gemini, you can leave it there and Gemini will hold it for safekeeping. The potential drawback is that you don’t have full control over your cryptos, as you are trusting Gemini with them.
If you want more control over how you hold your cryptocurrency, you can store it in a private wallet. You will keep a set of cryptographic keys to unlock your coins. Your cryptographic keys can be your phone, computer, USB drive, or even a piece of paper that you keep in a safe deposit box. As a result, you have the ability to do whatever you want with them.
The potential downside of the private wallet is, if you lose your keys, you completely lose your cryptocurrency.
How to Hold Libra
The big question among investors, especially Self-Directed IRA investors, is whether Libra can be held in a truly private wallet, such as a hard or cold wallet. This is important for investors who wish to use Libra as an investment and not for personal use.
Conclusion – The Future of Cryptocurrency
In just seven days, the price of Bitcoin has increased by 73%. Other cryptocurrency, such as Litecoin and Ethereum have also performed well, which began even before the announcement of Libra. Therefore, it is not easy to pinpoint what has caused the surge (or what the future of Cryptocurrency holds). What can certainly be said is, Bitcoin and other cryptocurrency is not so different from Apple or Google stock. Stock can go up or it can go down for no apparent reason. This is simply the unpredictability of investments.