Many investors, amidst economic uncertainty, plan to allocate at least a portion of their capital into digital assets. Despite the emergence of thousands of new coins and tokens in this market, the first cryptocurrency still appears to be the most attractive investment option. However, even in this market, times are not the best, despite the halving. So is it worth buying Bitcoin now?
From this article you will learn:
- Despite recent market turbulence, Bitcoin remains an attractive long-term investment due to its deflationary nature and increasing adoption.
- Investors are facing conflicting signals as global economic uncertainties and geopolitical events impact both traditional and cryptocurrency markets.
- Implementing a strategy of phased purchasing during price dips can help mitigate risk and potentially enhance returns for Bitcoin investors.
Why Buying Bitcoin Can Be Profitable?
Cryptocurrencies are often referred to as the financial assets of the future. And they are already proving the validity of this opinion today. However, there are several other important reasons to buy crypto assets and the leader among them – Bitcoin:
- Unlike fiat currencies, which inevitably depreciate due to inflation, Bitcoin has a deflationary nature. Firstly, the maximum number of coins is limited by the algorithm and amounts to 21 million. Secondly, its mining is constantly decreasing, as is the reward for a block. Thirdly, already mined coins disappear from circulation primarily due to loss of access to wallets. In this respect, Bitcoin is very similar to gold and, like the precious metal in the future, will only increase in value.
- The crypto market is becoming increasingly popular. Bitcoin, being its obvious leader, even in the current difficult situation, occupies more than 40%. This demonstrates its attractiveness to investors. Major players prefer to invest in the first cryptocurrency. As a result, there is a stable demand for BTC, which, with an improvement in the economic situation, will lead to significant growth.
- Bitcoin is not regulated by central banks, governments, fiscal authorities. Accordingly, nothing limits the expansion of its use and, consequently, the growth of demand and price.
Thus, investments in this coin in the long term should bring income to investors. Based on these considerations, buying Bitcoin as part of an investment capital is fully justified.
These global factors demonstrating the attractiveness of BTC as an investment instrument have a serious counterpart. The legal status of cryptocurrencies is still undefined, except in some countries, such as El Salvador. Decisions made by authorities and central banks can both contribute to the strengthening of this direction and completely destroy it.
Current Situation: Is It Worth Buying Bitcoin?
The cryptocurrency market is currently experiencing challenging times, prompting potential investors to ask reasonable questions about the rationality of purchasing BTC. Indeed, Bitcoin, especially during periods of decline, strongly correlates with the stock market. This is because both cryptocurrency and stocks are considered high-risk assets, and during times of crisis, investors tend to sell them, seeking refuge in bonds, precious metals, cash, and other defensive instruments. The year 2024 in the global markets could mark the beginning of the most severe crisis since the Great Depression. Inflation is rising at high rates, and central banks are sharply raising interest rates to combat it. Due to geopolitical events, prices for commodities and food products have significantly increased. All of this leads to an increased risk of major economies (such as the USA, EU, UK) sliding into recession, which could trigger a global crisis. In these conditions, both stock markets and cryptocurrency markets are falling. Moreover, many analysts claim that the bottom in the US indexes has not yet been forecasted. And further decline could significantly weaken Bitcoin as well.
These factors indicate that the market is not currently in the best moment for purchasing the leading cryptocurrency. However, as statistics from crypto wallets show, the number of BTC holders is steadily increasing and has added several million over the past year. Additionally, the number of coins in wallets with a balance of more than 1 BTC is growing, and holders are hardly selling coins on exchanges.
Typically, the market bottom (the minimum or near-minimum price) is the best time to buy an asset. Subsequently, there is a high probability of growth, thus providing maximum profitability for holders. However, ahead of the halving, Bitcoin has still significantly increased in price. Though it has not reached the levels forecasted by analysts.
Thus, investors are receiving conflicting signals, making it difficult to judge whether it is worth buying Bitcoin now. In such a situation, the strategy of purchasing an asset in parts works well. The funds allocated for crypto investments should be divided into 3-4 tranches, buying Bitcoin at significant price dips. As a result, it will be possible to average the price to levels close to the minimum, which will yield good profits in the future. And it is important to remember that the risk of getting stuck in a prolonged downturn or at near-zero levels of BTC investments should also be considered by every investor.