Bitcoin is most likely the first name to mention when you talk about cryptocurrency. It is not just popular for its continuous rise over the years, but also for its potential to keep rising. For this purpose, it may be advisable for you to invest in Bitcoin.
However, you can make a loss as much as you can make gains investing in Bitcoin. And, this is especially when you go into Bitcoin investment with a shallow knowledge of how to invest in Bitcoin. So, we’ve gathered some information that can help you to make a profitable investment in Bitcoin.
Advantages of Bitcoin Investments
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If you’ve been asking “is Bitcoin worth it?”, you may need to see the benefits of Bitcoin investments.
Liquidity
Liquidity is the ability of an asset to be converted to cash easily. Bitcoin is a liquid asset due to the availability of trading platforms, online brokerages, and exchanges across the world which makes for easy Bitcoin transactions.
Minimalistic Trading
Trading Bitcoin is not complicated, it only requires you to buy or sell bitcoin via an exchange and your wallet. And, these transactions only take a few minutes.
New Opportunities
Cryptocurrency trading in general is relatively new and promising. New coins keep coming out every day and in most cases people rush to buy them, thereby creating opportunities for huge gains. If you know how to make money with bitcoin, you’ll take advantage of every new opportunity to make a profit.
Lower Inflation Risk
Bitcoin is a decentralized currency, no government or institution regulates it. This makes it invulnerable to inflation. Also, It is less likely for cryptocurrencies to lose their value because the blockchain system is limitless. So, there is a minimal tendency of losing your Bitcoin investment.
Risks associated with Bitcoin Investments
Volatility
Bitcoin is known for high volatility, its price is always swinging. For instance, at a time 4 years ago, the price of Bitcoin was $20,000 and within a few weeks, it fell to $7,051. Currently, Bitcoin is a gold rush, but one may not be so sure about the next few years.
The Threat of Online Hacking
You might need tight security to keep your Bitcoin account from hackers as they are increasing by the day. However, Bitcoin exchanges such as Coinbase or Gemini have strong security systems to lower the risk of users’ accounts being hacked.
Limited Use
The use of Bitcoin is still limited as most states have not accepted it as a means of payment for goods and services.
Tips for investing in Bitcoin
Have a Strategy for Crypto Trading
To be successful with Bitcoin you must master a trading strategy, there are scammers everywhere waiting to take advantage of less knowledgeable traders.
From the UK fraud-alert service, investors lost a total of £113m to fraud.
So, don’t be quick to take advice from every corner on how to invest in Bitcoin. You should learn Bitcoin trading strategies thoroughly before going into Bitcoin investment.
Manage Risk
In-depth knowledge of Bitcoin trading helps you to identify risks. That’s why you need to ask questions and study before investing. Questions like: Is Bitcoin a Good Investment? Should I buy bitcoin now? how high will bitcoin go? will bitcoin go back up? are very relevant.
They help you maximize investment opportunities and gain. Another major knowledge you need to work with when investing in Bitcoin is your risk tolerance level.
You should not get carried away by the hype that you forget to critically examine the coin’s performance, potential, and future. Also, don’t trade above what you are mentally prepared to carry in case there is a loss. And for beginners knowing how to get started with bitcoin is a good risk measure.
Diversify your Crypto Portfolio
Did you know the popular saying: don’t put all your eggs in one basket is an investment tip? Committing all your money to one type of investment is a risky approach to investment.
Therefore, investment experts advise that every investor who seeks to maximize returns adopt the portfolio diversification strategy. This means you should invest in more than one asset so that the probability of losing all to a downtrend is low, that is hedging risk.
So, don’t only invest in Bitcoin, look for alternative coins that have good potential and invest in them.
Be in it for the Long Term
Cryptocurrencies have come to stay, it is almost impossible for them to go away. If you can buy and hold for a good number of years, you may get massive returns.
Automate Purchases with exchange
You can automate your Bitcoin purchases with bitcoin exchange to leverage the pound-cost averaging. This investment strategy reduces investors’ exposure during unfavorable market conditions.
By investing a large number of dollars in Bitcoin, for instance, you can purchase all units of shares at the same rate. The idea is so that you can earn a bit less when share prices are high, and a little more when prices are low. This way you wouldn’t have to track the market trends to know when to buy Bitcoin or when to sell.
Use Trading Bots
Trading bots is more of a trading hack and so, if you are a beginner investor, you may want to leave this for now.
However, trading bots can be helpful in some situations, they create buying and selling orders on exchanges and generally, automate crypto trading for you.
FAQ on How to Invest in Bitcoin
How Do I Invest in Bitcoin?
Investing in Bitcoin is not rocket science, a few steps can get you there. These steps include:
- Register with an exchange.
- Download a Bitcoin wallet and connect it to your bank account.
- Place an order.
Once you’ve received your order in your wallet you can start managing your investment
Also, keep in mind that you can earn Bitcoin.
So, how do you earn Bitcoins? There are many ways to earn Bitcoin, but a notable method is through an airdrop. Developers usually give away some of their new cryptocurrencies to gain traction. You can check some crypto news sites to know when an airdrop is happening.
Will Bitcoin Crash Again in 2022?
As of the 12th of October, 2021, Bitcoin fell significantly and you may want to know why Bitcoin is falling or why is Bitcoin dropping? Well, market analysts believe the fall was a result of a sell-off – many investors sold.
However, the chances of Bitcoin crashing this year are slim, on the contrary, it looks promising. Bitcoin has a good chance of experiencing major growth in 2021 as the price is still going up.
You may ask, why is Bitcoin going up? Generally, as interest is rising in cryptocurrencies and many are buying Bitcoin it is normal for its value to increase.
Are there Bitcoin Stocks?
The answer is yes. Bitcoin stocks provide an alternative investment strategy for investors. It’s a way of diversifying your investment to mitigate risk.
This is how to invest in bitcoin stock: simply purchase Bitcoin through a crypto exchange and store it in your wallet and manage it.
Is Doge Promising?
Many potential investors have asked, could doge be the next bitcoin? Just like Bitcoin, the price of Dogecoin is determined by people’s willingness to pay for it and fortunately, people are willing to pay a lot for dogecoin.
Currently, the market cap of $1 Dogecoin would surpass that of a value stock company. So, it’s promising.
Conclusion
Investing in Bitcoin is profitable if you have enough knowledge to manage your investment. However, always keep in mind that Bitcoin is highly volatile and if there’s any reason why Bitcoin will fluctuate, this is the first. Still, you can take advantage of the volatility to make a profit; all you need is to know how to start bitcoin investment and stay profitable.
