Bitcoin is the largest cryptocurrency by market capitalization and widely referred to as the flagship coin of the cryptocurrency space. For this reason, all other cryptocurrencies are collectively referred to as altcoins.
Bitcoin was developed out of the turmoil of the 2008 Great Recession as distrust of centralized financial institutions grew. The purpose of Bitcoin was to bypass the middleman in financial transactions, improving efficiency, reducing costs and increasing financial accessibility.
As a form of digital currency, Bitcoin is used as a speculative store of value. It is decentralized, meaning that no central authority controls it. Instead, Bitcoin is run by thousands of computers distributed around the world.
Is Now a Good Time to Buy Bitcoin?
Bitcoin has been on a downward trend since its record high of $69,000 in November 2021 – causing many retail investors to exit the market. Moreover, over the last few months, the cryptocurrency market has been rattled by negative events such as the Terra Ecosystem collapse and the Celsius fiasco, ultimately exacerbating the bleak trajectory for Bitcoin and the broader cryptocurrency market. In June 2022, Bitcoin tumbled to $18,000, marking the first time in history in which Bitcoin traded below the previous cycle’s all-time high.
Nonetheless, while some see a despairing and gloomy market, others see a magnificent opportunity. In hindsight, times of unprecedented fear and pessimism often turn out to be extraordinary opportunities to accumulate and asset at fair prices. After all, a $20,000 Bitcoin is a lot more attractive than a $70,000 Bitcoin. As a result, if you are a believer in the long-term potential of Bitcoin, right now could be a stellar time to start to scale into the market, albeit not without risk.
How Long Will the Crypto Bear Market Last?
Bear markets refer to a period of time where trading volume is low, supply is greater than demand, prices are falling and fear is extremely high. However, in contrast to traditional markets, cryptocurrencies are small and therefore more volatile. As a result, it is common to see prolonged and more volatile bear markets where 80% price drops are not out of the ordinary.
Having lasted for seven months and counting, the current bear market can be attributed to a variety of factors. Experts are pointing to concerns over tighter monetary policy, the war in Ukraine and rising inflation rates as the primary catalyst for slumping prices for risk-on assets such as cryptocurrency. Moreover, the cryptomarket has been following the stock market in recent months, which makes it even more intertwined with macroeconomic factors. Nonetheless, based on previous bear markets such as the 2012 or 2018 bear markets, many crypto natives are expecting the current bear market to last until late 2022 or early 2023.
Will Bitcoin Ever Reach All-Time Highs?
When Bitcoin reached an all-time high of roughly $69,000 in April 2021, Bitcoin grew to a market of $1.24 trillion. To reach this $1.24 trillion market cap sometime in the future, Bitcoin’s price would need to reach a value of $65,000. This number can be calculated by dividing the $1.24 trillion market cap by Bitcoin’s current circulating supply of 19,072,725 BTC.
In light of the current macroeconomic backdrop, it is unlikely that BTC will reach all-time highs any time soon. Investor confidence continues to dwindle as concern that the global economy may enter a recession continues to grow. Moreover, other risk-on assets such as stocks are also underperforming, ultimately suggesting the current bearish climate is being driven by factors far bigger than the cryptocurrency industry.
Despite the relatively bleak short-term horizon, it is possible that BTC could approach all-time highs before its next halving event. Most investors believe the value of Bitcoin will increase and may achieve greater growth between now and its fourth halving in 2024.
Is Bitcoin (BTC) a Good Long-Term Investment?
From an investing perspective, the closest thing that Bitcoin can be compared to is digital gold. Bitcoin can be considered as a speculative super commodity, with a value proposition based on it being a perfectly scarce, portable, immutable and divisible savings technology. However, despite these fundamentals, Bitcoin is still considered to be an extremely risky investment. Bitcoin is inherently volatile, often fluctuating by large amounts within a short period of time. The extreme volatility results from prices that heavily rely on shared beliefs and market sentiment.
High risk isn’t inherently bad or good for an investor. Risk works both ways, meaning that each investment into Bitcoin carries the risk of significant failure and benefit of significant success. As an investor, you must evaluate your own risk tolerance investing in Bitcoin and decide between a short-term strategy, long-term strategy or a combination of both.
Conversely, when compared to other cryptocurrencies, Bitcoin is arguably the safest investment in the space. It is the longest-standing cryptocurrency, with an untouchable value proposition, and fundamentals that suggest that it is the most meritocratic cryptocurrency in the world. Additionally, Bitcoin has a unique network from being the first cryptocurrency created of its kind, ultimately making it less susceptible to being easily replaced.
How to Buy Bitcoin (BTC)
BTC can be traded on major exchanges such as Coinbase Global Inc. (NASDAQ: COIN), Gemini, Crypto.com, KuCoin and Kraken. Many of these platforms allow you to purchase Bitcoin using your credit card, through swapping features or through different trading pairs such as BTC/USDT.
Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.
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How to Store Bitcoin Safely
Bitcoin can be stored using a hardware wallet or a software wallet. A hardware wallet is widely regarded as the most secure way to store crypto. It keeps your private keys offline so that your crypto is inaccessible to anyone but the holder of the private keys. Ledger wallet is a great choice for a hardware wallet –– Ledger claims to provide the highest level of security for crypto assets.
Conversely, software wallets enable crypto holders to securely store their digital currencies and tokens in one place. These types of wallets allow users to buy, swap, lend and earn cryptocurrency in an efficient manner. The Coinbase Wallet is an example of a software wallet.
How Does Bitcoin Fit in the Bigger Picture?
Bitcoin is a Layer 1 blockchain, a type of project that represents the base network or underlying infrastructure in a blockchain-based financial system. Its primary use case is as a decentralized store of value and a hedge against inflation; it is a new, fair and transparent money for a divided world. It isn’t designed for buying coffee; it’s designed to be the next global reserve currency.
Bitcoin is generally referred to as a first-generation blockchain. It wasn’t designed as an overly complex system, which is a strength in terms of security. In contrast, Ethereum is known as the first second-generation blockchain. In addition to financial transactions, second-generation blockchains allow a greater degree of programmability. Ethereum is a decentralized computing platform. The main idea behind Ethereum is that developers can create and launch code that runs across a decentralized network instead of a centralized server (using smart contracts). This aspect means that these decentralized applications (dApps) cannot be censored or shut down.
So, is Now a Good Time to Buy Bitcoin (BTC)?
If you are a long-term investor, then it may be a good time to start building a position over the coming months. Bitcoin now is the same as it was 2 years ago; nothing has changed besides market sentiment. However, the current macroeconomic backdrop is still gloomy, which means that accumulating BTC is risky. Further downside is more than likely in the short term. As a result, prudent investors will wait for signs of consolidation and a stabilization in prices before establishing positions.
Frequently Asked Questions
Is now a good time to buy Bitcoin?
If you are a long-term investor, then it may be a good time to start building a position over the coming months. Fearful environments often present greater opportunities in hindsight to accumulate an asset before the hype picks back up.
Can Bitcoin reach new all-time highs?
In light of the current macroeconomic backdrop, it is unlikely that BTC will reach all-time highs any time soon. Investor confidence continues to dwindle as concern that the global economy may enter a recession continues to grow. Moreover, other risk-on assets such as stocks are also underperforming, ultimately suggesting the current bearish climate is being driven by factors far bigger than the cryptocurrency industry.
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