Bitcoin continues its triumphant march even though its market cap fell below $100 billion for the first time since October 2017. Although Bitcoin retreated a little in 2018 in a subdued cryptocurrency market overall, some predictions for Bitcoin toward end-December 2018 are an indication of the immense optimism in this digital currency that is piloting the cryptocurrency revolution. Tom Lee from market analysis firm Fundstrat reaffirms his prediction on Bloomberg that Bitcoin will touch $25,000 in 2018. He holds on to his prediction despite the dip in Bitcoin in 2018 because he believes institutions such as banks will “pile into this space”, underpinned by better opportunities. Further, he envisages an improvement in the regulatory climate around cryptocurrencies, which would engender higher retail and institutional adoption.
Choose an exchange that can deal with volumes
The prediction seems bullish given the price of Bitcoin today. End of 2018 is just a month away and Bitcoin may have to see some frenzied trading to achieve these magic numbers. Some such frenzy towards the end of December last year caused severe setbacks for several exchanges and trading had to be halted briefly on Coinbase, a premier exchange as it was not able to cope with the crushing volumes. If Tom Lee’s predictions were to materialise even partially, Bitcoin will likely see some hyperactive trading, which brings us to the moot question of selecting an exchange that can handle high volumes efficiently and underscores the need for revisiting factors that define the best Bitcoin exchanges. A Bitcoin exchange is a digital marketplace at which people buy and sell Bitcoins or exchange them for either fiat currencies or alternative cryptocurrencies. Investors all over the world are eager to be in the fast-growing Bitcoin-trading space and a slew of cryptocurrency exchanges have emerged to support the infrastructure needs. Choosing the best Bitcoin exchange from among the vast array of exchanges that have varied offerings is indeed a formidable task for a newcomer. Before plunging in with both feet, investors should be aware of what they should look for in a Bitcoin exchange.
Bitcoin is the most traded cryptocurrency and a Bitcoin investor needs to be aware that the ability to deal with volumes is indeed one of the most important factors that determines the choice of a Bitcoin exchange. What good is an exchange or a trading platform if it cannot fulfil the orders placed by customers, especially when they want it most during a period of high action? Further, higher turnover also means a large number of orders, which gives the exchange the ability to match the buyers and sellers and have sufficient economies of scale to keep fees low. Safety is yet another feature that sets apart the best exchanges. Investors should do their own due diligence and find out if the companies that run the exchanges have a good track record, whether they can be trusted to keep the investors’ money secure. How long have they been operating, what is the reputation of the management in the market, and where are they located are also questions to consider while choosing the “best exchange”. Exchanges based in obscure corners of the world where consumer protection is weak could indeed be a risky proposition.
Further, an overseas exchange may mean that the investor would have to wire-transfer the money. If such a transfer is rejected by banks, it may result in the investor not being able to capitalise on an opportunity. In addition, analysts advise investors to look for an exchange that suits their individual needs. For instance, some exchanges cater to sophisticated investors with superior technological systems for limit and stop-limit orders. Besides these must-haves, investors need to look out for universal factors. Is the exchange reliable? Will it operate smoothly when volumes are high and the price of Bitcoin is whipsawing? Does it have regulatory issues? Does it have one-on-one customer support or is the investor steered to a user forum or FAQs? Surely, an exchange that meets all these requirements earns the reputation as the “best Bitcoin exchange”.