In early December 2013, bitcoin price crashed from above U$1000 to U$800 in ten days, on the news Chinese government was going to ban financial institutions from trading and using bitcoins. Fast forward to early January 2017, similar crash happened around U$1200 to U$750 in less than 10 days, on the news of increased oversight of Chinese government on Chinese bitcoin exchanges.

As Warren Buffett has repeatedly warned investors that it is terribly dangerous to attempt to time the market: “with a wonderful business, you can figure out what will happen; you can’t figure out when it will happen”.  Yet, human nature always takes hold. Like other markets, short term fluctuations in bitcoin are driven largely by the eternal struggle of greed and fear.

History seems to repeat itself. Boom-and-bust is normal rather than exception in bitcoin market since its inception. The following tables summarizes alternating booms and busts. If the numbers can offer any hint, high volatility reflects the experimental nature of the Bitcoin project.

bitcoin_boom_bustYet here we are, 6 years after bitcoin became publicly traded in early 2010, its annual compound growth rate reached 300% according the CoinDesk Bitcoin Price Index, beating any publicly traded asset class.

bitcoin_return.pngThe Bitcoin and electronic coin (or token) systems are still experimental with many features in active development. But unlike many good products and services at their early phases of R&D where only very few investors could participate, the majority can invest in their future success and the success of all the services and products built on top today. Of course, the key questions to ask: is there going to be a success and how to “measure” it? Our goal is to help answer these questions from the view of an average individual investor.