Top Reasons to Trade Bitcoin in 2022
Maybe you’ve followed the dramatic rise and fall of Bitcoin prices from the sidelines. Perhaps, you’ve noticed that 2022 hasn’t started well for Bitcoin. That’s because this virtual currency has lost 11% of its market value, dropping by almost 40% from the all-time high price last year.
Perhaps, the hint by the Federal Reserve that it will increase interest rates prompted many investors to dispose of their Bitcoins and go for safer investments. Also, other digital currencies, like Ripple and Ethereum, have plunged 9% and 13.5%, respectively.
But these price swings aren’t new to Bitcoin and other digital coins. Cryptocurrencies are generally volatile assets. And this volatility creates opportunities for people and institutions to trade them on platforms like ethereum code. But why should you purchase and sell Bitcoin this year?
Evolving Crypto Exchanges
Most people know crypto exchanges facilitate Bitcoin trades. A crypto exchange can be decentralized, centralized, or both. A decentralized crypto exchange doesn’t have an intermediary, meaning peers transact directly through automated code. At the same time, a centralized platform is a third party overseeing crypto-to-crypto or fiat money-to-crypto transactions.
Each of these types of crypto exchanges has its pros and cons. A centralized crypto exchange may be vulnerable to hacking, but it offers customer support. A decentralized platform is secure since it has one failure point. However, using it is harder for most people.
Novice traders prefer user-friendly platforms, while experienced users prefer decentralized exchanges. But crypto exchanges have evolved to cater to the needs of different users. Centralized crypto exchanges have decentralized and upgraded their security systems. Also, developers are creating hybrid crypto exchanges.
All these trends will undoubtedly benefit users while boosting the industry’s reputation. Therefore, 2022 might be the ideal year to start trading Bitcoin.
Maybe you already know that Bitcoin can quickly lose or gain value based on the flows and ebbs of trader’s demand alone. However, this digital currency aims to be a universally accepted payment method for services and goods.
But transitioning from its current status as a speculative asset to a currency will take time. Nevertheless, more companies now accept Bitcoin payments, including Microsoft, Rakuten, etc. PayPal, Starbucks, and Visa also have ways to allow customers to use Bitcoin on their platforms. Such developments show that this cryptocurrency could eventually be an acceptable digital currency alongside significant fiat currencies like the U.S dollar.
You already know that people have enjoyed using Bitcoin for around 13 years. According to the Lindy Effect, the hard-won survival of this digital currency suggests that it will endure another decade. Essentially, the Lindy effect states that a non-perishable item’s life expectancy is proportional to the asset’s current age.
If this ideology is something to go by, Bitcoin will achieve the necessary use and trust to increase its price to almost $1 million. Nevertheless, Bitcoin investors will need the patience to hold onto their coins because this might take decades.
Bitcoin’s Current Position
Currently, Bitcoin is the largest crypto or digital asset. In 2014, the largest crypto exchange, Mt. Gox, collapsed, but Bitcoin didn’t die. Thus, Bitcoin has survived crypto exchange hacking that saw traders lose tokens worth large sums of money.
In 2017, Bitcoin overcame an 83% crash, with the price dropping from $20,000 to nearly $3,000 in what the media reported as a Bitcoin bubble burst. Some people thought the bubble would kill Bitcoin, but it survived again. Some people say that this bubble burst made Bitcoin more robust and resilient.
Today, Bitcoin holds the top position as the best-performing cryptocurrency and the most prominent digital asset in market capitalization.
The Bottom Line
People and institutions have enjoyed using Bitcoin for over a decade. This virtual currency has overcome many hurdles over the years. Compared to other cryptocurrencies, Bitcoin is the best-performing and the largest. It has even performed better than some conventional assets. Hence, investors and traders should consider buying Bitcoin in 2022.