With adoption on the rise, the odds favour Bitcoin
Key Points
- Bitcoin adoption by institutional money is a boost to long-term growth.
- However, there are a few things to know about Bitcoin before you invest.
Bitcoin (BTC) is the dominant and most adopted cryptocurrency today. Since it launched in 2009, Bitcoin has been on a consistent uptrend, dips notwithstanding. At the time of writing, Bitcoin is up by 16,000% from its launch price.
Like the rest of the market, Bitcoin has taken a hit over the past months. However, if its buying volumes are anything to go by, investors still believe that Bitcoin is a high potential investment. With adoption on a growth path, especially at the institutional level, there is no doubt that Bitcoin optimism is high. That said, there is always the risk that Bitcoin could go lower.
So, is Bitcoin likely to bounce back and surpass its all-time highs? Can Bitcoin make you richer? Let’s analyze Bitcoin in more detail to help you figure this out.
Will Bitcoin Rally Again?
Bitcoin has made major strides in adoption. A few years back, Bitcoin was mostly the preserve of retail traders dreaming of overnight riches. That is no longer the case. Bitcoin today is a mainstream asset, and even institutions now hold Bitcoin. For instance, Microstrategy, a US listed company, is now the largest corporate holder of Bitcoin.
Financial instruments targeting Bitcoin are also on the rise. For instance, in the US, you can now invest in Bitcoin through futures. There have also been several applications for Bitcoin ETFs in the US, and at some point, one of them will be approved.
However, the most interesting aspect to Bitcoin is that it is gaining a use case as legal tender. El Salvador was the first country to accept Bitcoin as legal tender, and other South American countries, such as Honduras, are considering adopting Bitcoin as legal tender. As adoption grows, the impact on the value of Bitcoin could be huge.
The biggest trigger to a Bitcoin rally as adoption grows is the scarcity aspect of BTC. Bitcoin supply is capped at 21 million. Considering that millions of Bitcoin have been lost forever, it is not hard to imagine Bitcoin testing prices above $100k or more. It is economics at work. With growing demand from across the globe chasing only a few million coins, the price can only go up long term. Bitcoin is a cryptocurrency that can make you rich.
Read Also: Bitcoin (BTC) Price Prediction
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
A Few BTC Risks To Be Aware Of
While all the above factors make Bitcoin a worthwhile investment, it is essential to understand that Bitcoin carries its fair share of risks. One of the most significant risks when investing in Bitcoin is volatility. Unlike stocks or real estate, Bitcoin is a highly volatile asset.
To understand just how volatile Bitcoin is, consider that it dropped from a high of $20k in late 2017 to a low of $3100 by the end of 2018. Again in 2021, Bitcoin rallied to a high of $64k before dropping to lows of $28k.
Such volatility means you could lose a substantial amount of your capital if you are not careful.
Is Bitcoin A Good Investment For You?
Despite the risks, Bitcoin is a good investment. You need to have a long-term perspective of it. Consider that anyone who panic sold Bitcoin in 2018 made a loss, while one who held on to it made a huge profit when BTC hit $69k.
To have peace despite the volatility, one needs to consider the fundamentals. Knowing that adoption is growing fast, and Bitcoin has a low and capped supply, the chances are that it will only keep going up long term.
That said, there are risks that the price of Bitcoin could always drop hard before this happens and expose you to extreme losses. If you are not comfortable with such risks, you would better stick to stocks and other less risky investments.
Read More:
The 5 Best Ways To Buy Bitcoin (BTC)
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Pros and Cons of Investing in Bitcoin (BTC)