Bitcoin is a volatile investment,
The value of a single Bitcoin has risen and fallen over the years. However, this is not necessarily a bad thing as other investments also fluctuate in value.
To be a successful investor with Bitcoin, you need to be smart and strategic in your investment choices.
Since Bitcoin was launched, it has attracted investors from all over the world because it is a true global digital currency that is available to everyone (in theory). It’s no surprise that it has generated a lot of excitement.
Why is Bitcoin is rising every year
The value of Bitcoin has risen rapidly for a number of reasons, but one of the most important is that it is a scarce resource that is actually useful.
Unlike many other assets, there is a finite supply of Bitcoin that will ever be mined, and this scarcity gives it value. Additionally, Bitcoin is useful as a form of digital money, which has helped it gain popularity and drive up its price.
Cryptocurrencies has many use cases and transactions are just one of them.
As the number of Bitcoin available decreases, the value of each individual Bitcoin increases.
This is because there is increased demand for a limited supply. It is now difficult to mine Bitcoin, and this will only become more challenging in the future.
Investors find it appealing that Bitcoin has a predictable and reliable monetary policy that everyone can check. They can see at any time how many Bitcoins are in circulation and how many new ones have been created.
Bitcoin is a liquid asset, meaning it can be easily traded for goods and services. If you have a gold investment, on the other hand, it is not a liquid asset.
You would have to sell some of your gold stock for cash before you could purchase anything.
Bitcoin makes it very easy to do cross border transactions.
You don’t have to use a bank or go through any government regulations. You can send Bitcoin quickly and securely to anyone in the world. The transaction fees are very low compared to using regular currency.
The Internet is responsible for the rise in popularity and value of Bitcoin. The easy sharing of information globally is what will make Bitcoin successful as a currency.
The price of Bitcoin
You won’t be able to find an official price for Bitcoin because it doesn’t operate like regular, or fiat, currencies.
The value of Bitcoin is based on how much someone is willing to pay for it. A good way to gauge the current going rate for Bitcoin is to check the CoinMarketCap or CoinDesk.
The price of Bitcoin is an estimate of its value. Most cryptocurrency exchanges will let you buy Bitcoin in any quantity, including fractional amounts.
When should I buy bitcoin?
There are no guarantees with any investments, including Bitcoin.
While it has shown to increase in value really fast in the past, it also has periods of slowing down and falling until it is stable.
Learning and understanding this cycle is important for anyone considering investing in Bitcoin.
There are some great tools available for analyzing the price history of Bitcoin. The best two are probably:
1. CoinMarketCap
2. Coinbase
Bitcoin’s lack of correlation with other asset classes makes it a great addition to a portfolio.
For example, if there is speculation that a major currency will fall, such as the UK Pound with all of the Brexit issues, then if the currency devalues this will have an impact on other world currencies.
However, because Bitcoin is not tied to any particular economy, it is not affected by these sorts of events.
When thinking about Bitcoin, it is important to consider the global economy.
In fact, many investors consider Bitcoin as a hedge against inflation.
Do not focus only on what is happening in the United States, Europe, or China. Instead, think about how the economy of the world is changing.
Why long-term investment in Bitcoin is best
Although some people have gained short-term profit from trading Bitcoin, it is a risky strategy that requires expert knowledge.
As someone who is new to crypto investing in Bitcoin for the long term, your best bet.
If you had invested $1000 in Bitcoin in October 2017, two years later in October 2019 you would have made a profit of more than $700.
This would have given you a return on investment of over 70%. This is a staggering return.
Despite the possibility of high returns, you should still treat Bitcoin as a risky asset.
If you’re not prepared to make high-risk investments, Bitcoin might not be for you. You’ve seen an example of the potential rewards, so now you need to decide if it’s the right choice for you.
Bitcoin investment strategies in 2022
1. Buying and holding bitcoin for long-term
Generally its best investing in Bitcoin by buying it at a certain price and holding onto it for a period of time in the hope that the value will increase. This strategy is often called “hodling.”
Just like buying stocks or real estate, you hold out long-term until the value increases.
When it comes to investing in Bitcoin, it’s important that you do your own research and come to your own conclusions about whether or not to invest.
Don’t just take someone’s word for it when it comes to predicting whether the value of Bitcoin will go up or down.
Be sure to educate yourself on how Bitcoin works and use the available tools to make the best decision for yourself.
If you’re planning to adopt a buy-and-hold strategy for your Bitcoin investments, you can do the following:
- You should only invest an amount that you are comfortable with losing as Bitcoin is a high risk investment. This should always be kept in mind when you are trading.
- Don’t leave your Bitcoins in an exchange wallet once you’ve purchased them – move them to your own wallet. Make sure to read our guide about crypto security tips for beginners.
- It is better to use a reputable exchange to make your Bitcoin purchases, even if it may cost you a bit more. But at least you’ll know your crypto is safe.
- The best way to buy Bitcoin is not to purchase all of your coins in one trade, but to spread out your buys using the dollar cost averaging method. This involves buying a set amount of Bitcoin every month (or more frequently) throughout the year. By doing this, you ensure that you pay the average price for Bitcoin during the year.
2. Doing short term Bitcoin trading (Not recommended for beginners)
It’s not recommended that you start out with short term Bitcoin trading as we said before.
This is because you buy Bitcoins at a low price and then sell them at a higher price to realize a profit.
As you learn more about Bitcoin, you may want to move to a shorter-term trading strategy. Some large players in the Bitcoin market regularly profit from short-term Bitcoin trades.
However, you need to learn how to trade properly, which takes time and practice.
3. Bitcoin mining (Advance)
To make a profit from Bitcoin mining, you need to invest in a lot of high-end computer equipment and find the cheapest electricity you can. There are no guarantees!
As mining has become more difficult and competitive, we believe it is no longer a cost-effective way to invest in Bitcoin. Instead, use the money you would spend on mining equipment and electricity to buy and hold Bitcoin.
You might have come across cloud mining for Bitcoin. Here, you pay for a service that will mine on your behalf over the internet.
However, from our experience, these are either scams or such a costly investment that it would be better to just use the money to buy your Bitcoins.
Closing thoughts
Just like with any investment make sure to do your research and do not get caught up in the FOMO(Fear of missing out).