Is Now the Right Time To Buy Bitcoin?

Bitcoin, the leading cryptocurrency, has played an enormous role in the crypto market

Last Updated January 11th 2022

4 Min Read

If you are considering investing in Bitcoin (BTC), there is never a perfect time. If you believe in Bitcoin's value in the long-term, then buying and holding could prove to be a good strategy.

Over the past few months, we have received numerous emails from people wondering if it is a good time to buy Bitcoin. A few asked if they should sell everything for different reasons - from the cryptocurrency market being at record highs to soaring inflation to COVID ending. For those looking to make the best returns on their investments and reach their financial targets easier and faster, the answer to the question: 'Is now a good time to be investing in Bitcoin?’ Is likely to depend on when you will need the money and how you plan to use the money.

With Bitcoin down 25% from its highs, is now the time to buy Bitcoin? Let's take a look.

Institutions are buying huge amounts of Bitcoin
Bitcoin halving is less than 900-days away
Bitcoin is a scarce commodity
Crypto as a whole is now more accessible

The cryptocurrency market has grown by leaps and bounds over the past decade. From a small market mainly confined to dark web transactions, it is now a $2 trillion market and growing.

One crypto that has played an enormous role in this growth is Bitcoin (BTC). This cryptocurrency has maintained its dominance despite the rapid entry and development of new crypto projects into the market.

After the dip in May 2021 that saw it shed over 50% of its value, Bitcoin bounced back, hit a new all-time high of $68k and dipped again to its current value.

With such a significant rebound in months, one may wonder, is now an excellent time to buy Bitcoin (BTC)? Let’s take a look to get a clearer picture of it.

Institutional Adoption Of Bitcoin

2021 was the year that institutional money has flowed heavily into crypto. However, while a few other cryptos have benefited from institutional capital, the bulk of it has gone to Bitcoin.

This explains why a lot of the crypto-financial instruments in the market today are focused on Bitcoin.

Going into the future, Bitcoin is likely to continue to dominate in terms of the institutional flow of capital. There are a couple of factors that support this analogy.

For starters, it can easily be considered the safest cryptocurrency out there. Bitcoin’s unmatched network effect means that it will never be at the risk that most crypto projects are facing today.

The only way to attack Bitcoin is through a 51% attack, which at its current hash rate, is almost impossible to pull off.

Since institutions in most cases deal with other people’s money, they may not expose themselves to most of the altcoins that individual investors gamble on.

Then there is the fact that it is the most adopted cryptocurrency in the world. Any major institution that adopts crypto for payments is likely to adopt Bitcoin first then the rest. This is due to its market dominance and global recognition.

This is evident in the fact that Tesla, while its boss is heavily pro-Dogecoin, only adopted Bitcoin for payments. While this did not last, Elon Musk has still maintained that they will reinstate Bitcoin payments at some point in the future.

With adoption on the rise, the intrinsic value of Bitcoin will rise over time, which makes it pretty undervalued at current prices.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

The Upcoming Bitcoin Halving

The next Bitcoin halving is in 2024, and while it may sound like it’s too far off, that’s less than 900-days away.

Bitcoin halving cuts the number of Bitcoins that miners get by half. Historically, every Bitcoin halving has been followed by an exponential price rally.

For instance, after the 2016 halving, Bitcoin hit highs of $20k from lows of $600. Then after the halving of 2020, Bitcoin went from a low of $8000 to a high of $64k.

The rationale behind Bitcoin’s rise after every halving is simple, it tinkers with the demand and supply dynamics of the crypto.

While demand keeps rising, the total number of new Bitcoins coming into the market is cut in half.

This has the effect of pushing up the price, and the next halving will be no different. If previous halvings are anything to go by, then Bitcoin could easily test prices above $500k after the next halving.

In such a scenario, its current price levels below $50k are a perfect entry point, for anyone looking to profit from Bitcoin.

Check out: Factors That Could Significantly Influence Bitcoin's Price

Bitcoin Scarcity Factor

Besides the halving cutting on the number of new Bitcoins entering circulation, Bitcoin as a whole is scarce.

Bitcoin has a capped supply of 21 million coins that can ever be mined. That’s a very low supply for a cryptocurrency that is now globally adopted, and its demand ever rising.

To understand how scarce Bitcoin is, one needs to consider the fact that of the Bitcoins ever mined, millions of them are lost forever.

This pretty much makes Bitcoin one of the scarcest commodities on earth. It is this scarcity that has given it store-of-value properties that rival gold.

A while back, the 3rd richest person in Mexico said that if asked to choose only one asset to invest in over the next 30-years, he would choose Bitcoin.

He cited its scarcity as the main reason behind his reasoning. Quite rational because if adoption stays on the current trajectory, then prices above $500k are possible in the near future.

Bitcoin is Becoming More Accessible

Before 2017, Bitcoin was mostly accessible to techies. Today, the situation is so much different. There are multiple exchanges out there, and with very customer-friendly interfaces.

Fiat on-ramps for cryptocurrencies are on the rise too. Today, major card companies like MasterCard and Visa allow for crypto payments. These are all demand drivers for Bitcoin. Considering its limited supply, it’s not hard to see that it is massively undervalued at current prices.

If you're confident Bitcoin can grow at a high rate over the next five to 10 years, then it may be smart to buy Bitcoin (BTC) now. But remember that the cryptocurrency market is still highly speculative.