3 Reason’s Why Bitcoin is 2014′s Hottest Investment

by Traders Reserve | December 17, 2013 4:13 pm

The hottest investment in 2014 will be the virtual currency, Bitcoin!

Take it to the bank. In fact, I wouldn’t be surprised if Bitcoin doubles in value or more next year.

Sure there are those who say it’s nonsense, that Bitcoin is a raging bubble not unlike the “tulip craze” of the 1630s. Blah, blah, blah…

It is not. In fact it is far from it.  Bitcoin is not only here to stay, it is something that if you get in now can make you rich.  It is simply the most exciting financial story to come along since the dot-com boom.

I know what you are thinking. The dot-com boom ended in disaster.  Indeed, it did. The dot-com boom was indeed a bubble.  But before that bubble popped there were many that profited handsomely and did so over a long period of time before the implosion.

Exactly the same thing is going to happen with Bitcoin.  Yes, the story will end, perhaps even badly, but before that occurs you have what I consider to be one of the best investment opportunities of 2014.

Bitcoin is not even close to being the same as the Dutch tulip craze.

Here are three big reasons:

Bitcoin is Gaining Credibility…and Fast!

The number of financial commentators and investment managers commenting on Bitcoin has grown substantially over the last few months. That mere fact is giving credibility to the virtual currency.

For the concept to take hold and sustain the market needs that credibility. If you aren’t convinced of that credibility perhaps you might take a gander at the Bitcoin smartphone apps now available. Bitcoin is now seemingly everywhere. The sheer number of headlines on major financial site results in more and more people buying into the story. It is spreading like wildfire and likely to spread even more in 2014.

Now, regulators are picking up on the interest in Bitcoin, watching closely to make sure there are no shenanigans going on in this new virtual currency. Put it all together and the credibility for Bitcoin use is growing by the minute. That growth is sure to result in more buyers and investors jumping on board.

Bitcoin’s Demand is Insatiable

To truly understand the power of Bitcoin one must understand the psychology of the buyer or investor of this new virtual currency.

The promise of a currency not tied to a central bank has enormous power in certain parts of the community – think Tea Party here. The lack of trust in centralized governments has a huge following and Bitcoin suits these folks just fine. These are the same folks that drove gold prices to soaring heights. My bet here is that those former gold buyers are slowly but surely giving Bitcoin a try. Why not? The appeal is quite similar and like gold, Bitcoin has no real utility.

I can imagine many disgusted with the Federal Reserve enjoy taking it to the man by propping up Bitcoin. It won’t take many investors to push Bitcoin higher. I can think of plenty of sources for that demand making it almost insatiable as the Bitcoin phenomenon takes flight.

Bitcoin’s Supply is Limited

Basic economics suggests that insatiable demand results in higher and higher prices, but what if we add into the mix limited supply? The prices are going to go through the roof. That is the situation with Bitcoin. The beauty of this new virtual currency is that supply is limited. There will be no printing of funny money. What’s available is available. At the moment there are some 12 million Bitcoins in circulation.

How is a Bitcoin created? Without getting too technical, there are complex formulas that miners can use to unleash new Bitcoins on the market. The max number of Bitcoins that can be harvested is 21 million. The race then is on for miners and hoarders alike to accumulate Bitcoins. That puts even more pressure on the price as new buyers will be forced to bid up the price in order to acquire what can only be viewed as a rare virtual currency.

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