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Is This a Good Time to Buy Bitcoin? A Detailed Analysis

  • By: WiFi Tech
  • Date: June 27, 2022
  • Time to read: 6 min.

Over the last ten years, a collective curiosity has grown around Bitcoin.

Most traders are scared of the insane levels of volatility. At the same time, the brave ones chase the possibility of significant earnings by trying their luck in Bitcoin.

Although Bitcoin is undeniably a marvelous finding and has become far more reliable today than in 2013, it still has its downsides. It isn’t easy to forecast if Bitcoin will become the currency of choice or a universally acknowledged store of value like gold.

But with its surge in popularity and growth in worldwide acceptance, there is hope for it to become the future of fiat currencies.

With all the hype around it, is Bitcoin a good investment? in 2022? Let us investigate.

Is This a Good Time to Buy Bitcoin A Detailed Analysis

Is Bitcoin a Risky Investment?

Purchasing Bitcoin, similar to other assets, includes its share of risks.

Since its introduction, Bitcoin has been the first digital currency to initiate the present crypto ecosystem.

It had a clandestine following of entrepreneurs who thought it could be a viable substitute for the future of cash and fiat currencies.

Bitcoin has transformed into a very well-known brand as more financial institutions and authorities seek new modes of payment. This rise has occurred to fulfill their clients’ increasing needs for transparency.

Bitcoin has faced comparable criticism due to the lack of clarity. The current Bitcoin adoption rate is quadruple of what was in the last decade. Hundreds and thousands of individuals currently possess and trade Bitcoin.

 

What Role Does Bitcoin Play in Your Asset Base?

Unlike the traditional stock market, Bitcoin is subject to extreme volatility. The main reason is that there is no fixed trading window. Prices are subject to drastic changes at any point of the day.

You can purchase Bitcoin on a variety of cryptocurrency exchanges. While you may trade crypto according to your convenience, it’s ideal to join the crypto market when trading activities are at their peak.

In contrast to the stock market, high trading intensity guarantees sufficient liquidity to acquire a reasonable profit.

Unlike the stock market, which opens and shuts at specific times each week, Bitcoin and other cryptocurrencies are available to buy, sell, and trade 24 hours a day, seven days a week.

Some investors are drawn to Bitcoin because they consider it utterly different from stocks, giving it an alternative as a portfolio diversifier.

However, Bitcoin’s price is subject to volatility. Experts argue that having a lower asset allocation strategy for Bitcoin can enhance returns without exposing your portfolio to too much risk.

 

Risks Of Owning Bitcoin

Risks Of Owning Bitcoin

Even though Bitcoin has a lot of potentials, you cannot consider it the future of currency. You must know the downsides associated with investing in Bitcoin before you proceed.

1.   Volatility

This reward to risk ratio renders Bitcoin a risky asset. Still, its past track record motivates many investors to assume a bit more risk in return for possibly more significant profits.

2.   Cyber Attacks

Cyberattacks are another hazard that Bitcoin contends with on a day-to-day basis. The cryptocurrency exchanges are the primary target of hackers. Hacking has caused the Bitcoin industry to lose billions of dollars.

3.   Environmental Damage

Ecologically conscious investors should be aware of Bitcoin activities’ effects on our environment.

The Bitcoin network functions smoothly because of Bitcoin mining. Mining confirms transactions and ensures that the blockchain network remains secure.

This operative method is the “proof-of-work” verification. It needs a large amount of processing power to operate, resulting in high electricity consumption.

 

Is Bitcoin a Long-Term Asset?

Many cryptocurrencies, such as Bitcoin, were started to achieve short-term profit.

The truth is that you cannot guarantee the sustainability of any cryptocurrency project because of its volatility.

For example, early investors in Bitcoin benefited by leaps and bounds over the last decade.

To be regarded as a long-term success, cryptocurrency should aim to push for widespread acceptance globally.

Since Bitcoin is the most widely recognized cryptocurrency, it profits from its global reach, meaning more people would want to buy it. Many speculators see Bitcoin as “digital money,” but it’s worth more.

Bitcoin investors think the cryptocurrency will increase in value over time because it has a fixed supply, unlike paper currencies like the US dollar. Unlike Fiat currency, whose collection is unregulated, Bitcoin caps its supply to less than 22 million coins.

Many investors believe Bitcoin will see an imminent growth when national currencies decline in value.

Many people colloquially refer to it as “digital money” and think it can become the first global means of exchange.

 

Things to Remember Before Investing in Bitcoin

Like any other investment, Bitcoin carries both profits and possible losses. Bitcoin is a lot more susceptible to volatility in comparison to traditional stocks.

So here are a few things to consider before investing:

  •   We would not recommend investing your whole life resources in Bitcoin.

 

  •   It’s better to treat it like gambling, so spend a fraction of your discretionary money and be willing to risk all of it.

 

  •   Never invest cash meant for emergencies.

 

  •   Suppose you don’t have money to invest after every month. In that case, it’s advisable to avoid Bitcoin and invest in mutual funds instead.

 

  •   To maximize your chances of profit, use Bitcoin as a long-term asset, much like traditional stocks.

 

  •   Cryptocurrencies are very volatile because of bull-ish trends and sudden market crashes.

 

Here’s How You Can Invest in Bitcoin

Heres How You Can Invest in Bitcoin

The best way to purchase bitcoin is to buy the coin in parts or units on a reliable crypto trading platform.

However, there are alternative options:

1.   Purchase stocks in Bitcoin Firms.

You can put your money into bitcoin exchanges or acquire stock businesses that accept payments in bitcoin.

2.   Purchase ETFs

You can purchase a bitcoin exchange-traded fund (ETF). ETFs replicates the digital currency’s value, enabling you to acquire Bitcoin without really having to incur trading risks.

3.   Buy shares in blockchain software companies.

You can invest in public blockchains (the system used to analyze bitcoin information).

 

Best Platforms to Purchase Bitcoin

A plethora of centralized crypto exchanges provide Bitcoin. The biggest businesses exist in the United States, implying that you must follow the Knowing Your Consumer (KYC) standards.

Establishing an exchange account for taxation requires entering your details, like your residence and other personal information. Once you’ve gathered this information, you’re ready to begin.

1)   Coinbase

Coinbase

Using Coinbase is straightforward and secure. You can use it to purchase, trade, and retain Bitcoin. With a $0 deposit, you may buy a fraction of a Bitcoin.

Pay for goods by linking your account or using any payment card. Purchasing Bitcoin through this stockbroker is as easy as opening an account, validating your identification, and acquiring your Bitcoins.

Coinbase also offers a Coinbase Reward scheme, which rewards you for researching and learning about Bitcoin and other tokens. Coinbase Rewards is a terrific way to diversify your crypto portfolio without investing your cash.

Using the Coinbase phone application, you can keep track of your portfolio. The brokerage service lets you retain your bitcoin, exchange it for other cryptocurrencies and transactions, and send it to other people.

 

2)   Wunderbit

Wunderbit

Wunderbit is yet another brilliant and straightforward portal to purchase Bitcoins. This portal allows you to trade and buy Bitcoin, Litecoin, and other cryptocurrencies at the most economical commercial rates.

Furthermore, users may fill their accounts with cryptocurrency or purchase Bitcoins with your PayPal or Amex card.

A rare feature that distinguishes Wunderbit is its potential to detect ‘malicious’ bitcoin. This feature detects Bitcoins that have been engaged in hacking, financial frauds, or other illicit conduct and are traceable by federal officers.

 

3)   eToro

eToro

Trade popular cryptocurrencies, explore professionally managed portfolios, and connect with traders. eToro currently supports the purchase and sale of several popular cryptocurrencies.

 

 

 

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