The volatility shouldn't worry you.. the cryptomarket is stable

Investors should not be put off by the price volatility for cryptocurrencies like bitcoin and ethereum because these digital assets are still very new and offer nearly unparalleled returns.

On Tuesday, ethereum's price fell below $200 for the first time since May 30; the cryptocurrency has fallen more than 50 percent since hitting an all-time high of over $400 in early June. Meanwhile in May, a price correction for bitcoin wiped off nearly $4 billion in its market value.

Bobby Lee, CEO of Chinese bitcoin exchange BTCC, said the gyration in prices was normal as the true value for these assets have yet to be discovered.

"It's not a problem," he said on the sidelines of the Rise conference in Hong Kong. "If you think about it, the volatility is natural for an asset class that is so new. There's no price discovery for it (yet)."

"We're now sort of at ... a tipping point, where people are now considering bitcoin or ethereum or digital assets as more mainstream," Dave Chapman, from Octagon Strategy said. "A lot of the people that we service are actually very comfortable with having 1 percent of their net worth into bitcoin or ethereum."

Chapman added that while volatility may be off-putting, the returns on digital asset classes remain extremely attractive to investors. He said, "There's no other asset class in the world that could've given you the historic performance of this sector ... the historic performance, which is obviously not representative of future earnings, ... does appeal to a lot of people."

Analysts have made varied predictions about where prices and market capitalization for digital assets are headed. BTCC's Lee told CNBC he expected the market cap for bitcoin to hit at least $1 trillion, if not more, by 2025.

"I think it's going to go to at least $1 trillion, if not maybe $10 trillion in the next five to ten years," he said.

Data from industry website CoinDesk showed the current market cap for bitcoin is about $38.55 billion on a supply of about 16 million in circulation. The total supply of bitcoins is limited to 21 million. "In a grand of scheme of things it's nothing. Many, many companies are worth way more than that," Lee said.

Regulation may help lend more credibility to this market as an asset class: major governments including those in Japan, Russia and China are looking at introducing new rules.

Source: Bloomberg Pro Terminal

Trader Bozhidar Arabadzhiev

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