Invest in Bitcoin 2021, Things to Know Before Investing in BTC
As the overall popularity of cryptocurrencies grows, more and more people decide to invest in Bitcoin – not only the most famous crypto, but also arguably the one that has proven to be the safest investment. Although Bitcoin’s dominance rate has gone down in recent years, the fact that it is the only coin that has a dominance index attached to its name speaks volumes.
In this article, we will talk about Bitcoin’s price and whether BTC is worth investing in or not. We will also touch on some entry strategies and briefly talk about how profitable Bitcoin mining is in 2020. Without further ado, let’s dive in!
Why Bitcoin Is Gaining Traction
BTC price has slumped for a bit in early 2019 and stagnated in late 2019 and early 2020, but now it’s rising again. It is hard to pinpoint exactly why Bitcoin’s position is strengthening now, but one of the main reasons experts cite is Hype and FOMO. It’s simple: the more people buy Bitcoin, the higher its price rises. And the higher its price, the more people rush to buy it, out of fear of missing out on potential future profits. It is no secret that a lot of people consider crypto to be a speculative asset, and they only take interest in it to seek out short-term profits.
Why Invest in Bitcoin?
Why invest in Bitcoin and not fiat, stocks, or other cryptocurrencies? There are a few reasons why you should choose BTC.
Bitcoins Are Popular
As we have mentioned above, due to its popularity Bitcoin is often the first cryptocurrency people learn about. As a result, more people want to invest in it. Unlike stocks, cryptocurrency prices do not depend on the success of the company behind them (as they are mostly decentralized) or the economy of any country – they are based on supply and demand. Not only are higher transaction volume and public attention a sign that the cryptocurrency has a promising future, but they also often guarantee high liquidity, which is one of the key factors in choosing what asset to invest in.
Bitcoins Are Scarce
Unlike fiat, Bitcoin, just like other cryptocurrencies, has a limited supply. There will only ever be 21 million BTC. Therefore, it can be considered a finite resource like gold, silver, etc. Because governments can technically create (print) an infinite amount of fiat currencies, some investors consider gold, Bitcoin, and other limited resources a more profitable investment as their scarcity means they will not depreciate in value as quickly or as easily. Additionally, a limited supply means that according to the basic rules of economics, a growing demand for BTC will be accommodated not by higher production volume, but by higher prices.
Bitcoins Are Useful
As time goes by, Bitcoin becomes more and more integrated into our daily lives. It can be withdrawn from ATMs, it can be stored digitally, it can be used to pay for goods and services – according to coinmap.org, there are currently over 18k businesses accepting Bitcoin worldwide. Moreover, it is being recognized by established companies like PayPal, and the growing adaptability is a sign for many experts that Bitcoin is here to stay, making it a worthwhile investment.
Bitcoins Are Profitable
High volatility is both one of the main advantages and disadvantages of the crypto market. Prices can soar one day, and then crash the next one. However, not all cryptocurrency price movements are that extreme. For established coins like Bitcoin, the increased volatility may mean short-term losses, but it also provides higher returns than the traditional stock market. People who bought 1 BTC for $5k in spring and sold it now for $18k have made $13k – that’s a profit very, very few investment opportunities can give you.
Another thing worth mentioning is that the crypto market in general and Bitcoin in particular have shown great resilience amid chaos in the markets in spring 2020 – another good sign.
All that said, please remember one of the main rules of investment – DYOR, do your own research. Check out other cryptocurrencies and other forms of investment and make an informed decision. At the end of the day, you are the only one who can answer the question “should I invest in Bitcoin or not?”.
As has been mentioned previously in this article, Bitcoin has had a few ups and downs in the recent years, but prior to its surge in October, it mostly stayed below the $10k price level. It hit its ATH (all-time high) of approximately $19665 in December 2017 and hasn’t been able to re-peak since. Recently BTC elevated above $19k but then dipped back below $17k. Many experts are predicting that Bitcoin will recover and is going to not only reach a new ATH, but also surge past $30k, or, according to the JP Morgan forecast, even hit $140k. However, it is also possible that the coin’s price will continue to decline.
How to Invest in Bitcoins and Where to Buy It
Opinions are divided on this topic. Expert traders usually develop their own strategies, but it will be rather hard for novices to follow them. For example, a lot of experienced investors buy up new coins that they predict will have a lot of hype in the future – and, as we’ve mentioned previously, popularity plays a major role in determining a cryptocurrency’s price. However, novices lack the necessary experience to determine which coins will be on top in a few months or a few years. Therefore, established cryptocurrencies with stable growth rates are a much safer, yet still very profitable, bet, and there’s no better crypto to start your investment journey with than Bitcoin.
With Bitcoin being an established currency comes the drawback of there not being an obvious entry point. Although it has its dips, novices looking for immediate or at least quick profit may not be able to recognize them or determine whether the coin will plummet or surge in the near future. As a result, our first advice would be to hodl – do not chase immediate profit, keep an eye out for price surges, and store your coins in a safe place.
Here are a few basic rules that you should follow when you’re just starting out:
- Buy low, sell high
This is the most basic rule when it comes to buying any asset. Buy when the price declines and sell when you think it has risen enough for you to make a profit.
- Join the community
As a beginner, you might not be able to tell whether the price is sufficiently low or high enough to sell. Follow crypto bloggers, join chats, or read the forums – you don’t even have to fully immerse yourself in the crypto community to get some tips, just check up on it from time to time.
- Listen to different opinions
Try to follow a wide variety of people and do not make any conclusions based on the opinion of just one expert – they can always be wrong.
Although this is an article about investing in Bitcoin, we have to remind you that one of the most important investment strategies is to diversify your portfolio.
Although it’s good to be aware that the more advanced strategies do exist, do not try to learn them all or use them if you’re just starting out – it’s likely that they will do you more harm than good.
Where You Can Buy Bitcoin
Peer-to-peer exchanges offer users secure transactions and the highest level of anonymity available on the market but lack the liquidity exchanges can provide. In addition to that, they are usually not as beginner-friendly.
Changelly, with its intuitive user-friendly interface, low fees, and competitive rates, is a great platform for crypto newbies. Changelly offers great rates for Bitcoin, and lets you exchange it for over 160 cryptocurrencies. The company has recently expanded their ecosystem to include a fiat-to-crypto marketplace where you can purchase crypto with your native currency, and a beginner-friendly full-featured trading platform Changelly PRO. They work with the best fiat gateways and provide users with an easy, quick, and personalized way to buy BTC with your credit or debit card, bank transfer, or Apple Pay.
Binance is one of the most popular cryptocurrency exchanges, and it also lets users buy Bitcoin with their credit cards, bank transfer, or with over 150 different cryptocurrencies. Being the biggest cryptocurrency exchange, it has the highest liquidity and thus the best rates, but it’s not very beginner friendly due to its not as easy to use and navigate interface. Just like the other exchanges on our list, they have high standards of security and fair fees. Their ecosystem also includes a trading platform.
How to Secure Bitcoins
Whether you want to speculate on Bitcoin’s price or believe that it is the future and are prepared to hodl it till the end of time, you will need a secure way to store the coins you purchased. There are two types of crypto wallets: hot and cold. The former are connected to the Internet, making it easier to carry out basic transactions. On the other hand, cold, or as they are also called hardware, wallets are not connected to the Internet and thus are a lot more secure. However, that doesn’t mean hot wallets are not safe at all: they are still a good way to store your coins. Hot wallets are used for storing smaller sums of crypto or if the owner wants easy access to their funds, while hardware wallets are usually used by people who want to hodl their cryptocurrency.
This is one of the best hot crypto wallets for beginners. It has a simple, user-friendly interface that is perfect for newbies who are just figuring things out. If you ever have any questions, do not hesitate to contact their great support team. Exodus offers both mobile and desktop versions. It supports over 100 cryptocurrencies (including Bitcoin, of course) and allows users to easily swap them within the interface. Exodus can be downloaded for free. It is also compatible with TREZOR hardware wallets.
This is one of the best hardware wallets on the market. TREZOR Model T’s touch screen and an intuitive web interface make it perfect for beginners. This wallet can be connected to both your smartphone or your computer as it comes with a USB Type-C cable. It is extremely secure, supports over 1400 cryptocurrencies, and lets users exchange crypto within its web interface via built-in exchanges. It’s one downside is its hefty price tag – Trezor Model T is $170.
Ledger Nano X
This is one of the most popular hardware crypto wallets, and for a good reason. It is easy to use yet provides top-notch security. This wallet supports around 1500 cryptocurrencies, and just like the others on this list lets users exchange them within its interface. The Ledger Live app allows wallet owners to easily manage their portfolio on their computer or mobile phone. Overall, this is a good beginner-friendly hardware wallet that will cost you $119.
When Is the Right Time to Buy?
The short answer would be to buy low, when the price dips and is likely to rise again. Follow the general advice that is applicable to all assets: buy in anticipation of the events or news that are likely to drive the prices up.
One good beginner-friendly tool is the Crypto Fear and Greed Index. It was created and is managed by alternative.me, and it can be a good indicator to whether you should buy or sell your crypto at a certain moment in time. “Fear” shows a buying opportunity, whereas “Greed” signals that the market is due for a correction, which means the prices will fall soon and you should sell. It can be a useful tool for beginners, but just like with any other financial advice, don’t use this as a fool-proof guide and DYOR.
If you’re just starting out, try to buy when the price is falling, and then just hodl your new BTC until it rises enough for you to make a profit off it. If you want to learn more about predicting price movements, follow our advice from above and join crypto communities, learn about technical analysis, and, most importantly, get some hands-on experience. We recommend starting with smaller amounts just to get a feel for the market.
Should You Invest in Bitcoin Mining?
Mining becomes less profitable the more popular the coin is. With Bitcoin being the most popular cryptocurrency, there are a lot of people who try to mine it, leading to high costs. Of course, since BTC price is rising, so is the amount of money you can make by mining it – but it’s hard to determine whether you will be able to make a profit. If you want to take up BTC mining, you should check out possible options and calculate how much it would cost for you to run farming equipment. The profitability of mining Bitcoin will depend on the cost of electricity and the necessary equipment in the place where you live.
Bitcoin’s price may fall in the nearest future, but for as long as the public has an interest in cryptocurrencies, it will rise again. It is a profitable, yet relatively safe investment. Although it may seem daunting at first, seeing as it is significantly different from traditional forms of investment, after doing a little research you are sure to find out that it is very simple. You can invest in Bitcoin without having any technical knowledge about blockchain or cryptocurrencies, just be mindful of the risk and keep an eye out for any big news. And if you want to become an expert, there is an abundance of learning materials online.
Buy BTC and over 170 digital assets with your credit card, bank transfer or Apple Pay on Changelly.
How Much Does It Cost to Buy One Bitcoin?
At the time of writing this article the price of one Bitcoin was $16,9k. You can always check the current price on coinmarketcap.com.
Is It Worth Investing in Bitcoin?
We do consider it to be a worthwhile investment right now, but please be aware that we cannot give you actual financial advice. Please thoroughly research every asset before you decide to invest in it.
What Is the Best Investment Strategy for Buying Bitcoin?
The classic buy low & sell high.
What is the Minimum Amount of Bitcoin I Can Buy?
The lowest amount of Bitcoin you can purchase is 1 Satoshi, or 0,00000001 BTC. However, most exchange platforms and marketplaces have a higher minimum because of the costs associated with cryptocurrency transactions.
Are There Bitcoin Investment Plans?
There are quite a few. One of the most prominent ones is the ITrust Capital IRA.
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