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Is Bitcoin A Good Investment In 2021?

5 Min Read
Last Updated March 26th 2021

Learn Why Bitcoin Could Be A Good Investment In 2021

Are there good reasons to buy Bitcoin in 2021? Is the bull run just getting started?

Is bitcoin a good investment in 2021? This article explores five reasons why bitcoin could be a good investment this year.

Bitcoin needs no introduction to investors. It is the largest cryptocurrency by market capitalization and the most popular, even though it had a rough start to 2020, thanks to the COVID-19 pandemic. The cryptocurrency hit a low of $4721 when the pandemic hit but then rallied spectacularly and breached $40000 in January 2021.

Bitcoin reached a high of $41299 before a price correction brought it down to $35000. At the time of writing, the king of cryptocurrency is trading at $36701. 

Most experts have predicted that Bitcoin will have a bullish year in 2021. Some have even predicted that it could cross $100,000 by the end of 2021 and $300,000 by 2022. Such predictions are bold, but there is a possibility that Bitcoin can meet these expectations, making it an exciting investment opportunity. 

A Rocky Year 

2020 started on a rough note for Bitcoin, with a sharp drop in value. Bitcoin had faced downturns twice before, in 2013 and 2017. However, these drops in prices were natural, born out of speculation. This year was different, Bitcoin faced a bear market, and the pandemic took its toll on the markets. Cryptocurrencies bore the brunt of the downturn as investors sold off equities to move to cash.

Bitcoin crashed in March and reached a low of $4721. However, the lows did not last long, and Bitcoin was back in the green. The rally saw Bitcoin reach its highest valuation in January 2021. Despite the lows, the cryptocurrency ended the year on a record-setting high. 

Is Bitcoin a good investment in 2021?

Experts predict a bull run for Bitcoin in 2021, and there are several reasons why bitcoin could be a good investment in 2021. Let's look at some of the reasons below. 

5 Reasons to invest in Bitcoin in 2021:

1. Institutional Interest 

There is growing institutional interest in Bitcoin, and there was ample evidence of the same during the market selloff in March. Bitcoin experts believe that institutional interest will be a significant driver in the price of Bitcoin moving forward.

Coinbase, which is going public later this year, has announced that its institutional asset base rose from $6 billion to $20 billion in 2020 alone. Several highlights occurred over the past year to show the kind of interest Bitcoin has generated and continues to generate. 

  • JPMorgan Chase's JPM Coin goes live and forms the Onyx division to focus on blockchain technology.  
  • Galaxy Digital announces that it has acquired two companies, in line with its plan to build a platform for institutional access to digital currencies and assets. 
  • MassMutual announces that it has purchased $100 million in Bitcoin. 

The points above are just a handful of announcements. There were similar moves in other countries as the world looks to digital currencies and blockchain technology. Interest is also driven by platforms like PayPal, which are making cryptocurrencies like Bitcoin more accessible to people. 

More and more companies have started converting cash to Bitcoin as a more secure store-of-value. Notable among these is MicroStrategy, an analytics company. MicroStrategy converted $425 million cash to Bitcoin. Other companies like Square have also made similar moves and converted cash to Bitcoin. 

Read Also: How to Invest in Bitcoin 2021 

 

2. Inflation And USD's Decline In Exchange Markets

Bitcoin is often compared to gold, with investors terming it as a store of value. They are a fixed asset compared to fiat currencies. Bitcoin does not face inflationary pressures that traditional fiat currencies do. Recent inflation has hurt the purchasing power of the USD. Investors have hedged against the rising inflation and have invested in "safe haven" assets like Bitcoin, driving up its value. 

The US Government's decision to print $3 trillion can be seen as the reason for the Dollar's decline, and new stimulus bills could see a further weakening of the USD against world currencies. 

 

3. Mass Adoption As A Mode Of Payment 

Bitcoin has seen a steady rise in adoption as a payment method. PayPal announced that users of the service would be able to buy, sell and accept Bitcoin and other cryptocurrencies as a payment mode.

PayPal has over 350 million users that now have access to Bitcoin. PayPal's competitors have also started accepting Bitcoin, further enhancing the cryptocurrency's reputation as a payment mode, resulting in greater adoption by businesses and individuals. 

Read More: What Will Drive the Bitcoin Price In 2021?

 

4. Bitcoin Is Capped And Halving

Bitcoin is capped at 21 million, which means that no more than 21 million Bitcoins can exist, making Bitcoin scarce, driving up its price. The second reason for Bitcoin's high price is coded into the cryptocurrency. Bitcoin miners are rewarded for processing transactions. This reward halves every four years. Because of the process of halving, Bitcoin's rate of inflation is reduced. 

 

So is Bitcoin a Good Investment in 2021 : Conclusion 

Though you should decide for yourself whether Bitcoin is a good investment or not in 2021, it’s noteworthy that many investors believe in the bright future of Bitcoin and claim that it might outperform gold and other assets.

2020 was obviously one of the best years for Bitcoin, and there are many experts that feel 2021 will be good year for bitcoin and other crypto assets.

Put simply, Bitcoin is low-risk investment with lots of potential rewards. It’s something you should definitely do some research before you consider adding BTC to your portfolio.

Having said that, Investing in Bitcoin comes with risks. The cryptocurrency market is extremely volatile, and investors should be aware of their goals, strategies, and risk tolerance before investing in BTC. It is recommended that anyone looking to invest in Bitcoin should research thoroughly before investing, looking at market trends and expert opinion. 

 

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