Should You Invest in Bitcoin? An Ultimate Beginner’s Guide
Contents
- Is Bitcoin a Good Investment?
- Why Invest in Bitcoin?
- Best Way to Invest in Bitcoin
- How Much to Invest in Bitcoin
- Should I Invest in Bitcoin?
However, with a great investment strategy, anyone can enter the industry and earn profits from day one. Just know that there is no promise that you will reap any benefits. Therefore, the key is to invest an amount that you are comfortable losing as a way of incentivizing yourself to the market.
Is Bitcoin a Good Investment?
As with any other investment, nothing is ever for sure. There is no simple answer to this question. For instance, in 2017, Bitcoin’s value quickly spiked to an all-time high of $20,000 in December. For those who had previously invested in bitcoin, this was a great moment for them to cash in their large returns. However, since then, bitcoin’s value has slowly and steadily fallen lingering at lows of about $5,000. Those who bought bitcoin at a higher price before have admitted to making great losses today. However, the question of whether bitcoin is a good investment or not depends on how you choose to invest.
Bitcoin investing covers several activities such as buying and holding, bitcoin mining, and bitcoin trading. Buying and holding, otherwise known as ‘hodling,’ is the most common way of investing in bitcoin. If you intend on pursuing this strategy, only do it when there are clear facts that the prices will rise. Mining, on the other hand, has become extremely expensive and you should consider doing large scale mining for profit. Trading, on the other hand, gives you the ability to actively buy bitcoins at a low price and sell it at a higher price at short time intervals.
Why Invest in Bitcoin?
By now, you must have already decided to invest in bitcoin, or you are highly considering it. Below we list out reasons why you should invest in bitcoin.
- Despite mass criticism over the years, bitcoin has proven that it’s highly scalable and reliable. Despite harsh criticism, bitcoin has managed to stay put in the industry with its fundamentals growing even stronger.
- Bitcoin is extremely scarce. It has earned the name digital gold. It’s challenging and expensive to mine gold, which is true with bitcoin today. Moreover, there will only be 21 million bitcoins in existence ever, which makes mining the remaining ones extremely difficult.
- Bitcoin is an excellent store of value. Bitcoin is becoming extremely popular in countries plagued by economic woes. Although it’s not a good hedge given its excessive price volatility, many tend to turn to it in times of economic uncertainty as a source of stability.
- Cryptocurrencies are going mainstream and bitcoin is at the forefront of the revolution. It remains the most popular cryptocurrency with several real use applications under its belt. It’s the most reliable as most other cryptocurrencies trade to and from bitcoin.
- The current market sentiment is low, which is the best time to invest in bitcoin. As Warren Buffet best puts it, “be fearful when others are greedy and greedy when others are fearful.” It's the best time to invest in bitcoin.
Best Way to Invest in Bitcoin
While bitcoin access is still a ways off from becoming ideal, the investment options available today are more excellent than they were before.
Therefore, it’s imperative that you give these options your time and effort to evaluate what works best for you. The best technique of doing this is to play around with the options. For instance, you can start small like learning how to use a crypto wallet or buying bitcoin off an exchange. At this moment it’s a wise idea to spend extremely affordable amounts of cash that you would be comfortable losing.
Later on, when you are confident and ready, you can start investing more substantial amounts in bitcoin. Hodling is the most popular and best investment strategy for bitcoin. It’s also the best strategy for investing in bitcoin. You purchase bitcoin, whether it’s on a weekly, monthly, or yearly basis, wait for the value to rise significantly, and then sell. Selling when the prices are high is a great exit strategy. The challenging part lies in knowing when to enter and when to exist. The current bear market trend is a safe time to invest in bitcoin before the market potentially shifts to a bull market.
How Much to Invest in Bitcoin
As pointed out earlier in the text, bitcoin is a very volatile asset, and thus, you should never invest more cash than you can afford to lose. BTC investing is like playing the lottery; there is no guarantee that you will make any profits. Therefore, a good hack is to assume that any money you invest in bitcoin will you might lose forever. If at any one time that thought makes you nervous, then reduce your investment amount until you are comfortable. If you are intent on investing a more substantial amount into bitcoin, then start by trying to own a whole bitcoin first and then work your way to more considerable investments.
Should I Invest in Bitcoin?
Before you make any jump into investing in bitcoin, remember that bitcoin should be part of a proper financial strategy based on your goals, objectives, and current situation. If you decide to become a bitcoin investor, we recommend that you fit bitcoin as an alternative investment in your investment portfolio. With other asset classes such as bonds, stock, and cash, you can significantly reduce the portfolio’s overall risk through diversification.
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