The price of Bitcoin has been exploding in recent months with prices of the cryptocurrency already doubling in the first five months of 2017. Other cryptocurrencies like Etherium and Lytecoin have increased upwards of 700 percent in a 12-month period. Bitcoin now trades for record prices of over $2200 per BTC. And the total market cap is $79 billion for all cryptocurrencies in circulation.
This recent surge in cryptocurrency prices originates East Asia, specifically China and Japan. The Japanese authorities have recognized Bitcoin as a form of money, and Japanese investors have poured into cryptocurrencies in response. The Japanese represented over 50 percent of trading volume for the last few days. This is clearly a bubble, but prices look likely to continue rising for the rest of 2017.
Precious Metals vs. Cryptocurrencies
Precious metals and cryptocurrencies attract many of the same types of investors. Both forms of money protect people from government interference and give investors greater control over their wealth. The only difference is that precious metals are physical while bitcoin and other cryptocurrencies are digital.
Bitcoin is profitable, but it is simply not a safe way to hold large amounts of money. Investors who profit from Bitcoin should convert their profits into safer mediums like previous metals. As cryptocurrencies increase in size and influence, they will begin to draw the attention of government tax investigators who believe Bitcoin is a vehicle for money laundering. In addition, the Chinese authorities may begin to clamp down on Bitcoin because of fears of capital flight.