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Bitcoin rises 14%: Where next for the cryptocurrency?

Credit: Zach Copley

The rollercoaster ride that is the Bitcoin price has continued on Tuesday with the cryptocurrency recovering some of its weekend declines.

At the time of writing the Bitcoin price is fetching US$6,646 a coin, according to CoinDesk, up over 14% since this time yesterday.

What happened?

Over the weekend the Bitcoin price crashed lower after digital currency developers disagreed on its future and cancelled the SegWit2x upgrade which was schedule to take place this week.

This upgrade was due to be undertaken in order to improve Bitcoin’s transaction speed and cost by increasing the size of the blocks passed regularly around the network and stored in the blockchain from 1 MB to 2 MB.

But as the upgrade date drew closer, support for the upgrade softened amongst developers, ultimately leading to its cancellation.

However, there is speculation in cryptocurrency circles that SegWit2x has not be cancelled, but merely postponed and will go ahead in the not so distant future once a few issues are resolved. This speculation may have been the catalyst for its rebound overnight.

Where next for Bitcoin?

I suspect the Bitcoin price will be heading for a new record-high again over the coming weeks as traders return in their droves.

However, I wouldn’t necessarily be in a rush to invest unless you could limit it to just a very small portion of your portfolio.

While I do see positives in Bitcoin such as its lack of correlation to other asset classes and therefore the diversification it brings portfolios, it is a highly speculative and risky investment.

Investors may ultimately be better off skipping the cryptocurrency and considering tech shares such as Altium Limited (ASX: ALU) and XERO FPO NZX (ASX: XRO) instead.

Alternatively, I think these three small-cap shares have explosive growth potential and could even outperform Bitcoin in 2018.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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