If you have been expecting to turn a millionaire overnight by investing into cryptocurrencies, you may need to think twice. The prospects have been quite shaky and with returns from cryptocurrencies varying so greatly over the last 12 months, it is quite possible that people could be stuck in a loop and a perpetual state of no-return on their investment. Research has shown that ephemeral as they may be, cryptocurrencies still demonstrate returns.
According to a new research report conducted by the bitwise Asset Management, top performers and bottom feeders in the world of crypto gold have been posting quite different results. The top brass have been enjoying a return of 784.9% as early as December 2017 whereas the bottom ones have sported a respectable 300.1% return, which is nevertheless grossly inferior to the previously cited number.
The report started last March and during the period of the study, three cryptocurrencies led the way for their investors, including Ripple, XRP, and Stellar, as well as a little known Chinese token by the name of NEO. All of these had been tangled down in some controversy, but none more so than the Chinese coin NEO, which comes from the country that has outright banned cryptocurrencies without much of a ceremony.
However, the above list consisted the top windfall earners for investors in nine months out of the 12 monitored.
Bitcoin Performs Rather Poorly
Frankly, Bitcoin has long been a big name. Everyone swooned over its appeal and a few rich investors have been strutting their considerable expanses of wealth. However, the cryptocurrency’s heady pricing did not amount to much for investors, who had scored titbits of 15.2% in terms of returns.
Bitwise Vice President of Research and Development Matt Hougan said that it is quite normal for a cryptocurrency with the characteristics of Bitcoin to perform the way it does.
Meanwhile, Mr Hougan estimated that NEO and Ripple have managed to rake up higher returns because of what he described as clever marketing and tapping into the latest technologies, whereas Bitcoin seems to be an established behemoth that is rather reluctant to change.
Nevertheless, the report could not report any marked leadership across the list of cryptocurrencies. Even though Bitcoin was the most volatile, it is well worth noting that it was definitely not the only one to lose its leadership on the list of the most-yielding digital chunks of gold.
Mr Hougan was kind enough to provide his two pence as to why cryptocurrencies continued to be so volatile and what led to the disparity in the returns of cryptocurrencies. He cited both the volatility of the sector paired with the complete lack of understanding of the market by most investors, even though he was more moderate in his account.
“The difference between a centrally controlled cryptoasset like Ripple and a truly distributed cryptoasset like Bitcoin is immense,” Mr Hougan argued. “The market realizes this and the returns reflect it.”
However, a more interesting phenomenon has occurred of late. Cryptocurrencies may be linked between each other and establish a correlation in their pricing. With this in mind, it is interesting to observe how the ecosystem for cryptocurrencies has managed to establish connections between its separate entities.
Will Prices Take a Heavy Drubbing?
All scenarios are possible, given the current context for cryptocurrencies. You may enjoy yourself a few benefits, before the tides of fortune turn and wash you away. With taxing authorities taking a keen insight in how markets are regulated, you will see your assets come under heavy scrutiny.
Some buffs on Wall Street even predict an end to all cryptocurrencies by the end of 2019 whereas others expect the pricing for such assets to soar to improbable new heights by the end of 2020.
All sorts of theories are now floating around the place and investors are still torn – whether to keep splurging out on these assets or to sell and move on. Of course, selling en masse will only consolidate the power of established crypto leaders who are eager to acquire more bitcoin.
But the question remains – if these undercutting practices stay and a few entities acquire all bitcoin there is, then what is the currency’s value going to be if there is no other owners.
Simply put, any FIAT currency is valued only because it is widely used by everyone and you could not purchase any goods without exchanging that. If Bitcoin disappears from the mass market and regular people cannot access it, then it is quite likely that those greedy investors would have killed it, and not the unreasonable desire to become rich overnight of regular people.