Like any other market in its infancy, Bitcoin is no different and as such is highly speculative. Many investors from all walks of life are speculating on the Bitcoin and Cryptocurrency markets. There are various wide ranging reasons why Bitcoin is so speculative. One, Bitcoin and Cryptocurrencies are very new and even to the savvy in the know, quite technical. Two it raises questions about our current financial and banking systems which Bitcoin has been said to ‘challenge’. Three, Bitcoin in its current form is basically un-regulated. There are many other reasons including vastly un-adopted technology, projects build on top and around Bitcoin and other cryptocurrencies simply not having a working product, the list goes on.
To get an understanding of what we mean by speculation, let’s take a look at how it is defined currently with regards to economics.
Speculation: Speculation is trading or investing in a high risk financial product with the expectation of the product making lucrative gains in the future.
Speculation is a high risk strategy where investors look for high volatility and liquidity in order to take advantage of peaks and troughs in the price of a financial or other product regardless of the high risk.
Despite all this, the speculation from some savvy and not so savvy investors doesn’t seem to be slowing down. Bitcoin has really become the epitome of a speculative product. Massive gains have been made especially in periods such as December and January 2017-2018 when the price of Bitcoin soared to just under $20,000 USD @ $19,665.39. Then crashing all the way down to a low of $3220 USD in December 2018.