Is This The Best Time To Buy Bitcoin? And Other Questions To Answer Before Venturing Into The Crypto World

By Arnab Dey

February 19, 2024


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Are you feeling lost in the world of crypto?

This article will help you demystify the complex issues surrounding the blockchain ecosystem so you can decide the right move for your investment portfolio.

We lost track of how many cryptocurrencies are available on the market. However, according to data from Binance, Bitcoin and Ethereum are the most likely projects to make a return on investment as they have the largest market capitalization. 

Suppose you’re new to the crypto sector; you might have entered several discussions around cryptocurrencies and discovered that most beginner investors start by purchasing Bitcoin, as it has been the most successful blockchain-based asset in the last decade. Therefore, you’re wondering if you should use the same strategy. Well, you might figure it out if you answer the following set of questions. 

What Is Your Opinion Of Bitcoin?

crypto sector

Before you venture into the crypto sector, tell yourself why you want to add cryptocurrencies to your investment portfolio. Ask yourself how you see Bitcoin and other digital assets. What do you think about them? Do you see Bitcoin as an investment tool? Do you want to add it to your portfolio, hoping to make a return on investment? Do you believe that blockchain technology will start a new revolution? 

Crypto experts agree that Bitcoin is a multi-faceted asset that could bring change in multiple sectors. Nevertheless, only some perceive it this way, and they approach the sector with the only purpose of getting rich overnight. 

How you position yourself in the sector strongly influences your investment style. If you don’t see Bitcoin and other cryptocurrencies as tools that could spring the next technological revolution, you might not be ready to embrace a long-term strategy.  

Do You Consider Bitcoin A Bubble?

Another question many investors ask is whether this particular asset is a bubble. Some people believe that Bitcoin doesn’t generate income for holders. They think that while other commodities like paintings could produce value for their holders in the long run, Bitcoin is too volatile, and chances are it won’t turn lucrative. 

However, different investors have different opinions, and the facts show that Bitcoin went through several bull and bear markets, and it enabled its holders to make a profit. However, it’s challenging to tell if Bitcoin is a bubble waiting to pop or if it’ll become digital gold. Over the last few months, we have witnessed Bitcoin and other cryptocurrencies waking up from hibernation and more investors venturing into the sector. 

Why Is Bitcoin Valuable?

Bitcoin isn’t controlled by a network of investors or any government authority, so it drives value from the technology behind it and the innovations it brings in several sectors. A decentralized network is responsible for processing all transactions involving Bitcoin. Bitcoin differs from fiat currencies because it lacks the monetary authority to act as a safety net. However, Bitcoin also bears a resemblance to traditional currency because it has a limited supply. It’s impossible to fake scarcity because blockchain technology prevents users from altering the record. 

Bitcoin’s scarcity is the main factor that impacts its value because when its supply decreases, the demand increases. As the next halving gets closer, investors try to get a slice and profit from adding it to their portfolios. 

It’s also essential to highlight that Bitcoin has a limited utility, similar to gold. It can be used as a payment solution, especially for cross-border transactions, because it involves less taxes and is faster. 

Do You Want To Sell The Coins When Bitcoin’s Price Goes Up?

crypto industry

Now that you know what your opinion about the crypto industry is, you can think about the strategy you want to apply. Depending on how long you want to keep the asset in your portfolio, you can decide if you will sell Bitcoin immediately when the market enters the bull period, or if you’ll hold it for longer.

Before buying Bitcoin or another digital currency, deciding what kind of strategy you want to employ is crucial. By establishing it in advance, you’ll have no hesitation when the time comes. Remember that your main goal is maximizing your return on investment. 

Do You Find Bitcoin Too Volatile?

Satoshi Nakamoto created Bitcoin to function as a medium of exchange so it can be used to pay for products and services. However, over the years, the asset has gained the status of a store of value, which is quite a leap from its initial use. Blockchain-based currencies are well-known for being highly volatile, so many people feel insecure about using them to pay for products or services. 

Let’s be real, no one would use Bitcoin to create an emergency fund or to save money for paying for their dream house. The return on investment is a little bit unsure, so Bitcoin is more suitable for investment. 

Investors list it among other stores of value because it has plenty of room to grow as blockchain technology evolves. Nevertheless, it should calm down and become less volatile to maintain this status in the long run. 

Before investing in Bitcoin, you must decide how much risk you can take. You’re the only one who can decide if its volatility is beneficial or disadvantageous. 

What Could Cause You To Clear Bitcoin From Your Investment Portfolio?

Making a profit from crypto implies deciding what risks you’re willing to take and how you want to manage them. It’s essential to anticipate different scenarios to prepare for what the industry might bring. Make a list of the instances when you’d sell Bitcoin immediately. 

It would be worth studying Bitcoin’s fundamentals so you can write down the scenarios that could determine you to make such a decision.

Make a plan of action for every one of the factors you identify as too risky for your investment portfolio. When it comes to adding cryptocurrencies to your portfolio as a means to make a profit, you need to establish ahead of how you’ll react in particular instances to lower the risk of losing money. 

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Arnab Dey

Arnab is a passionate blogger. He shares sentient blogs on topics like current affairs, business, lifestyle, health, etc. To get more of his contributions, follow Smart Business Daily.

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