Bitcoin: Good Investment Right Now?
Recently, obtaining Bitcoin has become much more streamlined and accessible to the average person. More importantly, much more safely. Before you make your first bitcoin purchase for investment purchase, take a moment to learn about some of the reasons why Bitcoin is such an attractive investment opportunity, and whether those prospects align with your goals.
Despite its volatility, Bitcoin is still the dominant cryptocurrency even though altcoins like Ether are soaring up high beyond $3,000. The volatility, however, makes many crypto investors hesitant about investing more into cryptocurrency.
Other investors view this crypto as owning capital-backed assets due to the increased acceptance as an alternate asset. Bitcoin's dominance continues to soar up high as it ranks as the world's largest cryptocurrency with a $63,558 all-time high in April 2021.
The Signficance of Bitcoin
Ethereum ranks as the second-largest by market cap. The price of this altcoin and other cryptos were also affected when Bitcoin's value went below $50K on April 23. The effect brought about a $200B value loss in a single day in the cryptocurrency market, resulting from the price change of Bitcoin..
Due to the lack of a regulatory authority and ongoing volatility, it becomes a little challenging to invest in virtual assets. That's why some institutional investors like pension funds, retirement scheme companies, and hedge funds were a bit reluctant to put lots of money in Bitcoin.
Apart from these incidences, several other occurrences have made people develop mixed reactions about Bitcoin as an investment medium. The experts hold different opinions about the crypto's future, while scammers create fear among those interested in it by preying upon opportunists.
Why Do People Invest In Bitcoin?
Despite the ups and downs experienced from December 2020, this cryptocurrency has had quite an exciting experience. The coin first attained the $20,000 mark on December 16, 2020, to realize a 140% increase to $48,000 on February 9, 2021. This acute value increase was after the purchase of $1.5B worth of Bitcoin by Tesla's Elon Musk.
As of April 13, the cryptocurrency recorded its highest value of $63,558 following Tesla's announcement that people can buy their electric cars using Bitcoin. This was later followed by a series of ups and downs as trends in the mainstream media kept changing.
With Bitcoin currently standing at $33,174 (click tocheck the current bitcoin price), it's still worth looking at it as a lucrative investment. With the changing trends, the next shift in prices can go upwards. Here are the legit reasons why investing in Bitcoin is a good investment move.
Increasing Bitcoin Adoption For Practical Use
One thing worth noting is that the number of business ventures and institutions adopting Bitcoin continues to rise. Every day, a new step to integrating this digital currency into society comes to pass. PayPal, Microsoft Xbox, Tesla, Home Depot, and Newegg are just a few of those companies supporting Bitcoin.
The small and medium outlet stores aren't left behind either. According to a 2020 HSB survey, one-third of SMEs in the United States have incorporated Bitcoin in their payment options.
With the rising number of companies accepting Bitcoin, it's clear that cryptocurrency will be a formal digital currency payment option in future. And that makes it worth considering as a lucrative investment idea.
Rising Prices of Bitcoin
We saw Bitcoin prices plunge to a low of $30,000 on May 12. But the surprising fact is that it didn't stay that low for long because the prices rebounded to $38,205 just after 3 pm ET the same day. As you might have noticed, despite the prices lowering at some point, the currency picks up quickly to record a massive increase in value.
As the coin continues to dominate, more businesses and individuals realize that digital currency is a solution that can't be ignored entirely. As its popularity continues, the prices will also continue to rise. By viewing the currency from that perspective, you can reap massive profits with proper investment strategies in place.
Investment Portfolio Diversification
Bitcoin prices do not correlate with those of other assets, which have shown correlations with stocks. As such, many investors turn to the currency as a way of diversifying their portfolios. By making small allocations in Bitcoin, their traditional investment portfolios can achieve improved returns and adjust the risks.
Today, we've seen a growing trend in pension funds and endowments adding Bitcoin into their portfolios over the last two years. These include FairFax County Employees' Retirement System investment of $10 million through Morgan Creek Blockchain Opportunities Fund.
The reason why these institutions which were once shy in cryptocurrency are embracing it is to increase diversification. Bitcoin is a non-correlated asset that isn't affected by bonds and stocks.
Governments Support of Cryptocurrency
No single company or government owns Bitcoin. Instead, it's a publicly owned currency, the reason why it's viral. However, using cryptocurrency requires approval by the government despite not having any control over it.
Almost all governments worldwide have shown their support of Bitcoin, including El Salvador, which recognized it as an official currency. That means that digital currency is legally recognized to carry out transactions. And governments have taxation schemes in place for cryptocurrency investments.
Bitcoin has a clean record and has no negative associations with misinformation to attract more users. Every legal aspect of the currency is neat, which is why no government has risen against it, except for China.
The cryptocurrency market has many other digital currencies apart from Bitcoin. With most of them employing new marketing strategies, they are nowhere close to overthrowing Bitcoin's dominance. As a top digital currency, it has many advantages over competing cryptocurrencies.
The dominance of Bitcoin gives it an upper hand in dictating the prices on the exchange platforms. Despite others like Dogecoin and Ethereum recording massive percentage increase in value, they're still far much behind. These altcoins are trying hard to win people's trust as Bitcoin continues to dominate.
As such, Bitcoin gains favor in virtually every exchange platform over the other cryptocurrencies. That's why investing in Bitcoin is far much a better choice compared to the altcoins.
Is Bitcoin a Good Investment for you?
Some investors prefer owning Bitcoin directly; others view blockchain funds investment as a better move. However, possessing this digital currency is the best method of investing in cryptocurrency. Investing in Bitcoin is seen as owning gold where it can be a "safe haven" whenever fiat currencies have value decrease.
Other investors treat Bitcoin as a real currency for purchasing commodities and other assets. This perspective is supported by the increased embrace of this digital currency. Regardless of how you view it, properly planning your investment can turn it into a highly profitable venture.Want to learn more about trading cryptocurrency?
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