Bitcoin Investing

Bitcoin is Poised to Spike

  Using traditional investment metrics to track unconventional currency is a dangerous game.  Many have fallen into the trap of assigning grandiose trend calculations to financial data, only to find that they've bet hard on a big loser.   However, some of the most reliable metrics on investment patterns are ones that are seasonal.  Retail companies make money at Christmas time and vacation rentals go through the roof in the summertime.  These seasonal changes in consumer behavior tend to have very predictable affects on the markets.  There's one particular annual trend, however, that stands to make investors a ton of money this year. The bitcoin is one of the hottest commodities at the moment among investment speculators.  While there are many political and social pressures driving the bitcoin into the spotlight, for investors the primary reason for all of the attention being paid to the bitcoin is its regular and often predictable price fluctuations.    There is money to be made on the up-swing and the down-swing of the bitcoin price index.   History has also shown that the bull markets for bitcoin can reach extreme heights and that these up-swings can be fueled by events that affect traditional markets.  One of the most influential metrics for the movement of traditional investors is the Volatility index of the S&P 500, or the VIX. What is the VIX? The VIX measures the market's estimates of how wildly the prices of stocks will be fluctuating over the course of the next month.  Specifically, the VIX uses an index of the call and put options that are available to calculate the movement that investors are predicting.  History has shown that options traders as a whole are pretty good at predicting market movements over the short term. So why do we, the bitcoin enthusiast care about how good options traders are at predicting movements in the stock market?  Simple.  When the VIX goes up, investors get out.  Now "Getting out" can mean a lot of things, but traditionally investors have sought opportunities outside of the stock markets when volatility is high.  Gold and other precious metals have long been the benefactor of investment dollars during period of high volatility.  However, an increasing number of investors are now looking towards bitcoins as the "go to" alternative investment.  This means that demand for bitcoin has begun to rise when the VIX rises.  When demand rises, so do the current bitcoin prices. So let's recap.  Options traders are good at what they do, so we average out their thinking on market volatility to create the VIX.  The movements in the VIX affect demand for investments outside of the stock market and an increasing number of investors are seeing bitcoins as an alternative investment.  There's just one last piece of the puzzle that means that bitcoins are in for a spike.  Remember how seasonality affects the economy.  Well as a result of that seasonality and many more factors, the VIX, along with other volatility indexes like it, almost ALWAYS rises in late September or October.  This is something that options traders prepare for and it something that veteran investors   have banked on.  The October swell in the VIX is real. If you're not sure what this means for you, then you needn't be concerned.  However, for those of you looking to sell your bitcoins in the near future, you may to wait for the October swell as the price of bitcoins is almost guaranteed to rise.  More and more, the bitcoin is beginning to look like a contender on the global economic stage.