Investing in Bitcoin: Market Trends

Investing in Bitcoin seems to be the smartest thing to do, if you were to consider its meteoric rise recently. Bitcoin prices have reached an all-time record high hovering around $66,974 coinciding with launch of the first US Bitcoin-related ETF. Now, investors would be euphoric with this spectacular rise in value but they are also anxious at the same time given Bitcoin’s previous history of volatility. There had been a similar rise in value only recently in April but prices had started plummeting when Tesla withdrew its support and China imposed strict regulations on its crypto industry. But any decline has so far been short-lived and prices have bounced back sooner than later.

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Market trends one needs to know when investing in Bitcoins:

As the numbers of cryptoexchanges trading Bitcoins go up, like CoinDCX, Unocoin, or CoinSwitch Kuber, investors are found to be pouring more and more money into Bitcoins just as they do with stocks or bonds. Price trends suggest that this leading crypto may be hyper volatile. So, investors must not look at any price range as permanent. If you have seen its volatility in the past, you can be sure the fluctuations would continue, and prices would not simply be moving upwards in the future.

At the same time, skeptics argue that investors should not continue with the flow. Jon Cunliffe of the Bank of England is of the view that Bitcoin does not have any intrinsic value. As a result, a massive collapse of such unbacked assets is not unthinkable. Even if you were to ignore statements made by such skeptics, you should invest in Bitcoins carefully. Your total allocation must be nominal and not taking up a chunk of your portfolio.

The BTC market recorded an 8.3% CAGR during the period forecasted between 2021 and 2026. Because of zero risks of inflation, the Bitcoin market has been trending over time. Since there is no chance of excess Bitcoins being issued, threats of inflation are non-existent and this is advantageous for both the seller and buyer.

Transaction fees for BTC payments are much lower than if you were to use credit/debit cards for payment purposes. This is most beneficial for small and medium sized businesses working on a tight budget. You do not have to pay fees to get cryptos and if you pay more, you can get faster confirmations for certain transactions.

This explains why commercial payments are slowly leaning towards Bitcoin. Businesses all over the globe are toying with the idea of accepting crypto payments. Regulations have also played a positive role in mainstream adoption of the Bitcoin. In 2017, Japan had enacted laws to authorize its use as a payment method, making it as legal as any other fiat currency. This could not stop hackers and there have been ransomware victims recently; in 2019, Uber, for instance, was forced to admit that it had paid $100 million BTC as ransomware to hackers.

Finally, mining has led to a great burden on the environment and climate. According to reports, Bitcoin mining releases mega tonnes of carbon dioxide that can be compared to total emission in cities like Vienna and Las Vegas. But the biggest utility of Bitcoins is the absence of any central authority in executing transactions. All transfers are cleared, validated, and settled right away. Banks are showing an interest to lower their transaction costs and paperwork; they can actually end up saving a lot by lowering their processing costs.

Crypto, Investment