Is Bitcoin (BTC) Still A Safe Investment?

Find out more about Bitcoin, the flagship cryptocurrency, and why you should invest in it now.

Last Updated February 8th 2022
8 Min Read

A collective interest has ballooned around Bitcoin (BTC) over the past decade. Despite its high volatility, the premier crypto has hit the mainstream, cementing its position in almost all investor’s portfolios. Today, its adoption rate has scaled new heights. However, investors, regulators, and lawmakers are still questioning whether Bitcoin is a safe investment option.

Its overwhelming performance as a currency and an investment asset has attracted traditional and institutional investors. Additionally, its unpredictability and volatility have not dampened interest levels. So let’s see whether BTC is still a good investment option in 2022.

Bitcoin - The De Facto Standard Of Cryptocurrencies

Bitcoin will always enjoy the advantage of being the first and oldest cryptocurrency globally.

Bitcoin stands out as the de facto cryptocurrency trusted by most investors in the crypto market even today. Although thousands of cryptocurrencies have emerged since Bitcoin’s inception, the token has consistently featured in the portfolios of the most ardent crypto investors.

Since its inception, BTC has grown an underground following of investors who saw its future as a potential replacement to the traditional physical monetary system. Now, thousands of institutions and established investors worldwide have adopted the crypto, both as a store of value and a mode of payment. 

Therefore, Bitcoin has now become a household name. Moreover, thanks to the worldwide establishment of trading platforms, exchanges, and online brokerages, BTC is also arguably one of the most liquid investment assets in the market today. 

Another key reason for Bitcoin's tremendous rise is the growing inflation of the US dollar. To hedge against this rising inflation, several people have retreated from the dollar and have started finding shelter in digital currencies like Bitcoin. Moreover, Bitcoin is now being considered as a safe-haven asset against market volatility and inflation.

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Is BTC Set For A Bullish Rally In 2022?

2021 was a year of both highs and falls for Bitcoin and most other cryptocurrencies. After the May 19 crypto market crash, BTC tremendously recovered and raised higher, hitting an all-time high of $68,789.63 on November 10, 2021. However, the price of BTC corrected over the following months due to the bearish market.

Despite all the volatilities, analysts believe that BTC is on its way to passing the $100,000 mark in the coming years, which makes it a good buy now. Moreover, the cryptocurrency market capitalization fueled by Bitcoin’s growth has crossed the $1 trillion mark. Out of which, Bitcoin is responsible for roughly 42% of the total market value.

Why Is Bitcoin A Safe Investment? 

Experts predict that BTC could reach new record highs in the coming years. 

Kate Waltman, a New York-based certified public accountant who specializes in crypto, says,

“The most knowledgeable educators in the space are predicting $100,000 Bitcoin in Q1 2022 or sooner.” 

Jason Williams, a partner at a digital asset investment fund Morgan Creek Digital, “foresees the price moving to at least $1m in a few years, powered by the scarcity narrative and increasing allocation from corporate treasuries.”

CoinFlip founder, Daniel Polotsky, said, “As Bitcoin continues to mature and increase in value, usability, age, and trust, it will behave less like a growth stock and more like a store of value. Eventually, Bitcoin will dethrone gold as the king of safe-haven assets, and hopefully, this changing of the guard takes place by the end of the decade.” 

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Factors That Make Bitcoin A Good Investment 

Thanks to its worldwide adoption, BTC is still a safe choice for investors. 

Here are a few factors that support the prediction that Bitcoin could continue its massive rally in the coming years. 

1. The El Salvador Legal Tender

One of the key factors that boosted the price and value of BTC in 2021 was El Salvador’s decision to make Bitcoin a legal tender. This way, El Salvador has become the 1st country globally to recognize a cryptocurrency officially. It is also the first and last country to have Bitcoin in its treasury. As of September 2021, El Salvador had 700 coins, and President Nayib Bukele hasn’t missed any chance in announcing his purchases on social media platforms.

Moreover, according to Brazil’s Federal Deputy, the country is also seeking to accept BTC as a legal payment method. Paraguay and several other countries are also looking to follow suit. With more countries accepting BTC as their legal tender, the value of the crypto will hit new all-time highs consistently, making it a safe investment option for long-term investors. 

2. Rapid Increase In Institutional Adoption 

Worldwide adoption from institutional investors has been a crucial factor behind BTC’s annual growth rate. Consequently, several institutional investors in the US now prefer BTC over gold as a hedge against inflation.

Established financial companies like PayPal and Fidelity have made their moves in this cryptocurrency. For example, PayPal has nearly 350 million users who will now have the ability to buy, store, and use BTC. It also has over 20 million active merchants who can now accept the currency, boosting Bitcoin’s investability quotient. 

Moreover, Square and MicroStrategy have also used their balance sheet to buy Bitcoin as they invested their complete trust in the future potential of this digital asset. Recently, MicroStrategy purchased almost 1,434 Bitcoins for about $82.4 million by taking full advantage of the crypto’s pullback from all-time highs. This has made the company's total Bitcoin stash to 122,478 coins worth approximately $5.9 billion. MicroStrategy CEO Michael Saylor is quite optimistic about BTC’s potential and said that ‘Bitcoin is “going up forever,” so the company’s recent purchases shouldn’t come as a surprise.’

Several platforms and companies are opening up opportunities for investors by introducing Bitcoin. For example, Minneapolis-based US Bank has recently rolled out crypto custody services for those institutional investment managers with private funds seeking BTC exposure. Twitter has also recently expanded its BTC tipping feature to all iOS users globally. Moreover, in March 2021, Morgan Stanley became the first large US investment institution to offer its global clients access to Bitcoin funds.

In the future, several other top companies will announce their investments in the crypto, giving more momentum to the market and establishing Bitcoin as a leading investment option. 

3. The Expected Rise Of The ETFs

Recently there has been quite a lot of speculation that the US Securities and Exchange Commission (SEC) will be soon approving BTC exchange-traded funds (ETFs). An ETF will allow investors to gain exposure to BTC without holding the underlying cryptocurrency. As of now, numerous companies have applied for approval with the US SEC for both Bitcoin and Ethereum based ETFs. If approved, these would likely trigger wider adoption of the cryptocurrency among investors, pushing its value even higher. 

4. The Halving And The Stock-To-Flow Model

Apart from mainstream adoption and interest, another crucial reason for the rise in Bitcoin’s price can be credited to the two key attributes inherent in its design.

The first is the limited supply of 21 million BTCs. The total supply of BTC is strictly capped, and this number will always stay static. As of now, BTC has a circulating supply of 18,952,062 BTC coins. With growing interest in this coin, the adoption rate is increasing steadily, leading to a scarcity of the coin. This will significantly boost its demand and value in the future, making BTC a millionaire-maker investment option today. 

The second is the unique process coded into its protocol called the halving. The crypto has its own built-in escrow mechanism where BTC is released and given to miners as a reward for processing transactions. This reward mechanism is cut in half after every four years. By doing so, the token’s rate of inflation is reduced by half in each halving, and its stock-to-flow ratio is doubled. Further, this process will continue to happen every four years until all Bitcoin in this escrow mechanism is released and in circulation. 

So far, Bitcoin's price has closely followed its stock-to-flow ratio, and if it continues on the same trajectory, BTC’s value could be somewhere around $100,000 soon. 

Check Out: 15 Reasons Why You Should Invest in Bitcoin Today

Is Bitcoin Still A Safe Investment Now?

Records and data have shown that the number of investors purchasing Bitcoin via platforms like PayPal and Cash App has grown tremendously this year. As of now, over 100,000 merchants worldwide accept Bitcoin. With its tremendous rally backed up by established investors and institutions, this number would grow significantly in the future. 

Moreover, the number of active wallet addresses on the Bitcoin network is multiplying, indicating a thriving ecosystem. Besides, celebrities like Social Capital’s Chamath Palihapitiya and famed hedge fund investors Paul Tudor Jones and Stanley Druckenmiller have endorsed Bitcoin lately, pushing its popularity higher. 

According to experts, Bitcoin has thus taken centre stage in the global geopolitical climate. Therefore, 2022 might be the year of massive adoption for this top cryptocurrency, making it an ideal investment option now. 

A Final Word 

With China doubling down on its crackdown on cryptocurrency trading and exchanges in September 2021, the rest of the world had to choose sides. However, with most regulators and nations refusing to dismiss the asset completely, the world has been more welcoming to the new wave of technological innovation that blockchain offers. Bitcoin is, without any doubt, a revolutionary technology in the market today. And experts predict that despite its high volatilities, Bitcoin still could be a safe investment option for investors to generate massive returns in the long run. 

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