The information age we live in can be tricky to navigate. Obviously, there are terms like ‘fake news’ that have caused a lot debate, but those labels are perhaps too simplistic to describe the shaping of information. In short, we have so much information at our disposal that it is possible to shape almost anything into a particular narrative with ‘facts’.
Consider how we could run a story about Tiger Woods thrilling win at Augusta National in the Masters last month. On one hand, we could easily build a positive story, which most media outlets did, talking about Woods’ return to the top of golf against the odds. On the other hand, we could make it into a negative story, perhaps omitting some facts to stress that Woods has only won one Major in 10 years. It’s still factual, but the narrative has been pulled in away in another direction.
This idea of shaping a narrative is particularly important for financial investment, because the media can present facts to pull is one direction or another. The shaping of these narratives can be even more seductive when it comes to areas that most of us don’t really understand, such as cryptocurrency.
Bitcoin investors buoyed in 2019
The job of the media is not only to present selective facts and allow the reader to make up their own mind, but to analyse and interpret, and most importantly contextualize. In respect to something like Bitcoin, anyone could quickly pull up dozens of articles arguing that you should buy Bitcoin, but just as quickly find articles that advise to sell the same cryptocurrency. Which is true?
As mentioned, contextualization is important. Anyone who bought Bitcoin at the start of 2019 would have realized gains of around 45% had they sold at the end of April 2019. Indeed, 2019 has been an excellent year for Bitcoin investors, with three consecutive months of gains from February through to April, the first such bull run since 2017. Those are solid facts, making it fairly unequivocal that you would have made money by buying Bitcoin at the start of the year and selling after four months.
Volatility and decline can still lead to profits
But there is obviously more to than that. 2018 was widely cited as an annus horribilis for Bitcoin, with the price dropping dramatically after the famous gains of late 2017 when the price of Bitcoin almost reached $20,000. Bitcoin didn’t always go down in 2018, of course. In April 2018, for example, the price rose by 33% across the month; it also rose by just under 21% in the month in July 2018.
The point is that even saying that Bitcoin had a bad year in 2018 might obfuscate the whole picture. Some Bitcoin investors could have a really good year, provided that they bought and sold the digital currency at the opportune moment. Indeed, there are plenty of ways to trade cryptocurrencies, such as CFD derivatives, which don’t necessarily mean the value has to go up in order to make a profit from your trade. In short, some investors see the volatility as an opportunity, not a negative aspect of cryptocurrency.
Things look good for cryptocurrency investing at the moment, with some experts suggesting Bitcoin in particular could be in for more gains. But there is a broader area being developed around blockchain technologies that could provide even more opportunities for investors. Whether or not that pushes the value of Bitcoin up further remains to be seen.
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