What every investor should know before boarding the Bitcoin Wagon
It’s no doubt that most investors fear losing their money by investing in Bitcoin. However, a vast majority of them also fear missing out on this critical moment. Critics have argued that cryptocurrencies like Bitcoin are a rip-off and fraud. However, these digital currencies have continued to gain increasing popularity world-over.
The value of Bitcoin has kept fluctuating over the years. However, its price has surged to over 370% over the last 12 months. This cryptocurrency has also had its low, with the asset’s value dropping by more than 10% without warning.
Even with these challenges, people are still trading and investing in Bitcoin via exchanges like this website. Such investing software provides tools and information that guide investors when purchasing and selling Bitcoin. Some of these tools allow investors to trade this cryptocurrency in both automated and manual modes.
But that aside, every investor should analyze the crypto market carefully before making any move. Also, they should understand the volatile nature of Bitcoin and other cryptocurrencies before investing. For instance, Bitcoin value crashed in 2018, losing around 80% in value. Most investors don’t know why this happened.
What Has Changed?
Investors should know that Bitcoin is in its developmental stages. The current surge in Bitcoin demand is because retail investors have their eyes on this cryptocurrency. The weight of this investors’ group behind this crypto has increased its popularity.
What’s more, money transfer companies like Visa Inc. and PayPal Holdings Inc. have somehow embraced this cryptocurrency. Some hedge-fund stalwarts are also investing a lot of money in Bitcoin. And this shows that Bitcoin’s mainstream acceptance is increasing.
Consequently, more people are thinking about investing in Bitcoin and other cryptocurrencies. But, investors should still think carefully to determine whether Bitcoin is an ideal investment asset.
How People Use Bitcoin
People have used Bitcoin in different ways for over a decade now. The purpose of this cryptocurrency was to be a form of universal, decentralized money. But has it lived up to its role?
The recent decision by PayPal to allow account holders to transact in Bitcoin will undoubtedly be a revealing experiment. During the COVID-19 pandemic, Bitcoin had a remarkable performance. And this depicted it as a go-to asset for hard times. Initially, people opted for gold during such times. But this is changing because Bitcoin outperformed it in 2020.
As such, evidence showing that more investors are going for this digital currency is increasing. Essentially, investors are using this currency to hedge financial or economic risks like fiat currency devaluation.
Most investors are not looking at Bitcoin as an exchange medium. Instead, they see it as an ideal inflation hedge and speculative asset. But, investing in this cryptocurrency compares to betting that it will be the gold’s equivalent one day.
Don’t Invest Blindly
The historic Bitcoin’s performance can excite even seasoned investors. However, every investor should be careful to avoid making rushed moves and regretting them later. Most experts recommend buying and holding Bitcoin for the long-term. That’s because the world is entering another territory with people finally accepting Bitcoin as an asset class. However, this cryptocurrency is yet to achieve global acceptance, even as an exchange medium.
Therefore, investors and traders should not crank up risk appetite abruptly or change their investment portfolio radically to accommodate Bitcoin. Instead, they should moderate their risk and see Bitcoin investments as lottery tickets.
Nevertheless, some people have reaped up to 44% from their Bitcoin investments. This, it’s mostly about the willingness to risk and to strategize. For instance, don’t buy Bitcoin at its all-time high price. Instead, buy when the price is low and wait for it to increase. Ideally, know when to buy, when to hold, and when to sell your Bitcoin.
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