Bitcoin prices have soared over the past year, but now there are questions about whether that surge will continue or if we’ve already seen peak crypto. Investors are already asking if it’s still worth it adding Bitcoin to one’s portfolio.
In this post, we will show you some important things you need to know about bitcoin and other cryptocurrencies before deciding whether to invest.
With bitcoin mania seemingly in the rear-view mirror, many investors are wondering where the industry sits today.
Well, the answer depends on how you look at it. If you are someone whose time horizon is longer than a few months and if you can stomach volatility, then bitcoin is still a good long-term investment. If you have enough money to take advantage of dips without too much damage to your portfolio, then it’s an even better investment for medium-term or short-term (1-2 years) purposes because this industry has been known for wild swings lately.
There’s no denying that bitcoin was the big winner in 2021, with euphoria about the digital currency approaching fever pitch.
It was everywhere: on TV, in newspapers, even on billboards. Everyone from financial analysts to your parents and grandparents was talking about it. And why wouldn’t they be? It had surged in value since its creation, reaching an all-time high of $65K per coin before year-end!
But with bitcoin now trading at roughly half the price it reached in February and substantial publicity still driving interest, questions have arisen about what comes next for the industry.
The price of bitcoin has fallen from its peak of $65,000 in late 2021 to around $23,000 today. Those declines were driven by a number of factors. These include
- A steep drop-off in speculative interest as some traders sold their holdings
- Regulatory crackdowns on fraudulent activities such as scams and money laundering that had grown rampant during the boom years
- Tech setbacks when scaling solutions failed to gain traction
- Geopolitical turmoil that dented adoption rates overseas and increased government regulation within countries like China where most mining takes place (that sent prices tumbling).
What Indicates That Crypto Could Be In A Bubble?
Some experts suggest that it may not be the best time to buy Bitcoin presently because the price of bitcoin is driven by speculation, not based on the value of its underlying technology, network, or users. In fact, many experts believe that Bitcoin is in a bubble.
While there are no set rules to define when a market reaches a state of being “in” or “out” of a bubble – and you can find plenty of opinions online – we’ll look at some common indicators to determine if crypto could be in a bubble right now:
- The rise in bitcoin prices was fueled by speculation and not organic growth in adoption or usage
- The price has been largely driven by retail investors rather than institutions
- Prices are driven more by hype than fundamentals
Is Bitcoin Worth Investing In Right Now?
The answer to this question depends on your risk tolerance, time horizon, and investment strategy. If you’re a long-term investor who believes in the future of cryptocurrency and is willing to take some risks along the way, then yes. It is probably worth buying Bitcoin right now.
However, if you’re not sure about your investment strategies and don’t want to put any money into risky assets like cryptocurrencies until you’ve had more practice—or if you’re just starting out as an investor—then maybe not.
If you do decide that Bitcoin is something worth investing in at this point in time (and I think it probably is), keep these things in mind:
The price of Bitcoin could rise or fall dramatically over short periods of time—even after years of sustained growth. So don’t buy more than what’s comfortable for you financially; if possible, invest only what can be lost without making life too difficult for yourself.
But Why Do Some Investors Think It Might Be the Best Time to Invest In Bitcoin?
Well, everyone has their own opinion about the recent crash in Bitcoin price. While some believe it is best for investors to stay away from it, others see it as a good time to take advantage of the market and invest in Bitcoin. So why are some investors speculating that this might be the best time to buy? Let’s look at a few of these reasons:
Low price of BTC
First, the current price of Bitcoin is very low. That could be a great opportunity for a smart investor that knows the value of Bitcoin and looking to add it to their portfolio. Bitcoin will not stay on the floor forever. This is not the first time it will be suffering from a major crash like this.
So if you are able to buy Bitcoin at a very low price now, you will be making a lot of profit by the time the cryptocurrency is back up on its feet.
The acceptance of Bitcoin is increasing every day
More and more businesses are accepting payments via Bitcoin, and more people are using it as an alternative currency. This means that if you buy now and hold onto your coins until later this year or next year (or even longer), they have a good chance of increasing in value significantly over time.
Bitcoin has a real-world use case
Bitcoin can be used as collateral for loans or as payment for goods and services online or in person. And that makes it different than other cryptocurrencies like Litecoin or Ethereum, which do not have these same uses. Bitcoin can be used as currency, which means its value will rise as more people adopt it for everyday purchases.