Bitcoin has a lot in common with most traditional financial assets when it comes to investment. This is like investing in stocks, bonds, currencies, and more, but it's a digital asset instead of a physical one.
Since Bitcoin is a unique financial asset, it has been compared to gold and can potentially replace the US dollar as the world's reserve currency. But essentially it is a digital commodity or collectible, unlike gold or company stock.
Over time, the price of BTC has consistently risen - it was $0.003 at its launch, and since then, Bitcoin's price has risen to $60,000. If you hold on to Bitcoin bought in the past, you must have made a profit.
But is it worth buying Bitcoins at present? Let us find out.
Is Bitcoin worth investing in - Its performance in 2021
Many investors wonder if Bitcoin is an excellent long-term investment or if the best times are over. Bitcoin's historically produced substantial returns on investment. In 2020, central banks printed at full speed because of the pandemic, so Bitcoin had a great year. Because Bitcoin's supply was limited, investors piled in.
Since there are 21 million Bitcoins, there'll be scarcity, especially with US dollars printing so much. Inflation-averse people with diminishing cash reserves are flooding into cryptocurrency markets.
As the market pulled back in 2022, Bitcoin dropped quite a bit. Massive selloffs haven't stopped Bitcoin from recovering, and it's a bet on disruption.
Uncertainty can open doors to opportunities. It's been overbought, then oversold.
A recession may force the Federal Reserve to pivot its monetary policy, causing Bitcoin to boom.
Is Bitcoin safe to invest in in 2022?
Over the last decade, Bitcoin has returned 100 million percent on investment, so investing in Bitcoin is almost always a good idea. The trick is figuring out when to buy and when to sell.
As history shows, Bitcoin can fall pretty drastically in 2022, but it's only a matter of time before the market recovers from this dip. There are a lot of external problems in the crypto world right now, and Bitcoin will probably stay at the top if you think crypto will survive. Bitcoin is a bit binary. Is cryptocurrency going to be around for a long time?
The market will eventually reach $1 million in 2022, so Holder's will look at it as another chance to pick up value. We're not sure whether that's the case, but right now, there's nothing to suggest that another explosive move upward won't occur. When we collapsed like this, the market always made higher highs in the past.
Advantages and Disadvantages of Bitcoin
Even though Bitcoin has been a good investment so far, some cons to consider before investing.
Advantages
- The most significant ROI of any investment has been Bitcoin since it was introduced.
- Bitcoin has outperformed gold, stocks, oil, etc., since 2009.
- Cryptocurrencies like Bitcoin were the first ever.
- Bitcoin's digital nature makes it rare and valuable.
Disadvantages
- If Bitcoin goes to zero, it's not impossible.
- The volatility of Bitcoin can cause violent price swings at times.
- There's still no clarity on Bitcoin's regulatory future.
- Bitcoin's value may not be realized for years.
Technical Analysis of Bitcoin Understanding the subjective nature of the technical analysis is important when viewing charts. Bitcoin has fallen rather hard since the middle of 2022, but it provides insight into the market's direction. In the future, however, massive buying may occur in the areas of $20,000 and $12,000, indicating that the downtrend has just about ended. This may be an excellent investment opportunity in the long term.
How Much Should You Invest In Bitcoin?
The amount you invest in Bitcoin depends on your investment and comfort level. The standard suggestion is to never invest more than you can afford to lose when investing in anything, let alone Bitcoin.
Bitcoin prices could rise to $500,000 in the future. But it is indeed difficult to predict what will happen with such new tech. The scarcity of Bitcoin could make it one of the hottest assets on the planet.
Try investing a few Bitcoins first before investing more heavily. The smallest Bitcoin denomination is 1 Satoshi or 0.00000001 BTC.
The content of this story DO NOT represent the views of HackerNoon and are meant as information only from the lens of the independent contributor. Please DYOR before investing.