Bitcoin’s recent performance has the market abuzz with chatter about the digital cryptocurrency’s future, and few things are on the minds of crypto-investors as much as Bitcoin’s potential post-tax season break. Many are now asserting that the world’s leading digital currency is set to experience a small boom thanks to the extra money a great deal of Americans are going to have after this coming tax season passes – so, is there any truth to these rumors?
As you’ll come to see, extra cash in investor’s pockets could indeed fuel a short-sighted surge in Bitcoin’s evaluation, but the debate surrounding the cryptocurrency has more long-term fundamentals that need to be considered before a full analysis of its future pricing can be formed.
Be careful when dealing with rumors
You’d think investors would have learned by now to be more careful with where, when, and how they bet their life savings, but there’s still an impressive amount of misinformation floating around in the market that’s driving some people to make foolish decisions. A recent surge in Bitcoin’s value seemed to supercharge investors with confidence, and has many across the market insisting that the cryptocurrency is on the break of a post-tax season boom that will see values soaring towards heights we haven’t seen in months if not years. Investors should throw some cold water on their heated ambitions, however, and consider some basic facts before going all-in on a potential Bitcoin boom.
First and foremost, Bitcoin backers in particular should understand by now that it’s long-term fundamentals that need to be driving your investment decision, not short-term crazes driven at least in-part by media headlines. While you should always take the actions of others and the broader market into consideration, you shouldn’t be letting a temporary spike in news coverage surrounding cryptocurrencies to fundamentally change your long-held investment plans. Other altcoins that are overperforming currently, like Ethereum, for instance, could continue to find success themselves, rendering any bolstered value on Bitcoin’s behalf relatively short lived.
Still, it’s hard to argue that the recent spike in its valuation is anything but good news for Bitcoin. Recent plunges in valuation over the past few months have garnered some seriously negative media attention for the cryptocurrency, causing the market to be even more volatile than normal, and a spate of good news will serve as some much-needed wind in the sails of investors everywhere. When trying to determine what Bitcoin’s long-term fate will be, however, investors should always remember to keep their eye on the big picture.
Bitcoin’s uncertain future
When it comes to Bitcoin’s future, it all seems to come down to regulation. Countless investors who first flocked to the cryptocurrency seemed to do so precisely because it offered a way to facilitate financial transactions away from the prying eyes of central banks. To this day, the level of privacy Bitcoin and other cryptocurrencies offer is doubtlessly one of the reasons so many continue to funnel their money towards them. An increase in the level of regulatory scrutiny of Bitcoin in India and altcoins undergo in the future could thus seriously impact the market, and crypto-investors should be keeping a closer eye on central banks and regulating authorities than many are currently.
Recent changes in the way Bitcoin fees are processed, for instance, are likely to have a vastly bigger impact on the long-term health of the cryptocurrency than any recent tax reform initiatives will. Political efforts like tax reform, too, have a tendency to come undone; if a new congress is ushered in during the forthcoming midterm elections, for instance, there will be plenty of reasons to believe changes to the tax code fueling cryptocurrency’s growth could be undone.
In short, investors who are paying too much attention to Wall Street and not enough attention to the halls of congress are seriously letting themselves down, and need to be doing a better job of keeping an eye on future regulatory changes when it comes to divining the future of their crypto-cash cows. Widespread fears in late 2017 that Asian governments would be cracking down harshly on Bitcoin, for instance, drove many valuation plunges, so investors who don’t want to be caught off guard by sudden sinking valuations in the future should keep a close eye on the news at all times. Don’t let tax season cause a crypto-freak out that ruins your digital investment portfolio. Try to ignore the hype that may be surrounding Bitcoin and other cryptocurrencies until the hubbub from the recent tax reform efforts has died down, or you may end up making a panicked decision that was fueled more by emotions and temporary insecurities than logic and long-term fundamentals. Above all else, don’t count Bitcoin out just yet; the cryptocurrency still has a bright future ahead of it, and it will take more than stormy political waters from a harsh tax season to halt its growth.