Should You Buy Bitcoin?

Find out whether buying Bitcoin is the right move for you.

Last Updated March 14th 2022
20 Min Read

Bitcoin (BTC) is not only the most popular cryptocurrency but the largest digital asset in the world with a market capitalization of $736 trillion.

Here's a brief overview of Bitcoin, the most valuable digital asset, its core areas of business, and – most importantly for prospective investors – the pros and cons that can help answer the question: "Should I buy Bitcoin?"

  • Bitcoin at a glance.
  • Pros of buying.
  • Cons of buying.
  • Bitcoin's predictions by experts 
  • The bottom line: Should you buy Bitcoin?

BTC has returned 57% in 2021 and crossed several price milestones ($35,000, $40,000, $50,000, $60,000 and $65,000) which saw the crypto asset bring huge gains to growth investors who made purchases in the first months of 2020 when BTC was exchanging hands below $10,000.

With competing altcoins such as Ethereum (ETH), Cardano (ADA) and Tron (TRX) providing smart contracts through their blockchain technologies which see their assets price driven by the performances of several protocols in the decentralized finance (DeFi) space and not merely on speculation (forces and demand and supply), is Bitcoin a digital instrument which can still make gains for new investors?

With Bitcoin average transaction fee currently at $1.79 while Tron (TRX), Cardano (ADA), Stellar Lumens (XLM), Dash (DASH), Ripple (XRP) and Chainlink (LINK) offers average transaction fees which are cents close to $0, should you consider buying Bitcoin (BTC) when other crypto assets have additional features powering its price can bring huge gains in the future considering they are now trading at a relatively lower price?

Is Bitcoin a good investment and will the digital asset continue to soar in 2022 and beyond? Will the parent crypto succumb to the pressures of extensive government regulation which will see the cryptocurrencies run and value in dollar terms come to an unfortunate end?

At a current trading price of around $39,000, BTCs price is miles away from the capital several investors have set aside to risk with the hope of earning rewards.

Inasmuch as BTC is relatively expensive when compared with other altcoins, current data about risk/reward favours the cryptocurrency as an asset that is yet to attain its highest value, thereby making it a good investment prospect in the future.

Since you are not a holder of the asset and merely researching its potential, it’s extremely important that you get to know how current holders of the cryptocurrency view the digital asset.

To be able to know the future price patterns of the asset, you must understand the sentiments of holders in terms of buying more or selling the crypto asset and the overall outlook of the cryptocurrency market as part of meeting their investment goals.

The price may look relatively high to potential investors but when more Bitcoin days (quantity of Bitcoin multiplied by the number of days since coins were moved from one user wallet to another) are created than being destroyed, this means more people are holding onto their BTCs.

Considering the asset as a store of value and not just transactional digital currency, holders have a view of seeing the asset being worth more in the future than its current trading price.  

With Bitcoin reaching an all-time high of $68,789.63 in November 2021; there are currently three milestones ($70,000, $80,000 and $90,000) which precede a $100,000 price valuation.

Several investment experts are predicting Bitcoin to reach $100,000 by the end of 2022 or in 2023.

Inasmuch as cryptocurrencies are volatile and BTC seems to have lost 40% of its all-time high (ATH) price, various indicators are pointing to bullish patterns for the asset which makes the digital currency an asset you should consider worth your hard earned fiat currency in terms of investments.

Contents:

Bitcoin Cryptocurrency at a Glance

Pros of Buying Bitcoin

Cons of Buying Bitcoin

What are Analysts and Experts Advising on Bitcoin?

Where do I Invest in Bitcoin?

The Bottom Line: Should You Buy Bitcoin?

 

Bitcoin (BTC) Cryptocurrency At A Glance

An anonymous person who goes by the pseudonym Satoshi Nakamoto created Bitcoin (BTC) to spearhead the new form of currency which directly competes with fiat currencies after the 2008 financial crash and released the cryptocurrency in 2009 after a crash of the housing market.

The primary purpose for the creation of Bitcoin was to eliminate the middleman (traditional banks, clearing houses and insurance companies) through the use of a decentralized ledger called blockchain.

The supply of Bitcoin (BTC) is finite and capped at 21,000,000 with the circulation supply of 18,983,112 representing 90% of coins mined.

The first major users of BTC were black markets such as Silk Road (an online market and the first modern darknet, best known as a platform for selling illegal drugs) which made off with $214 million.

Bitcoin (BTC) first started trading in July 2010 at a price which ranged from $0.0008 to $0.08.

Since that time, investors have had an awesome ride in terms of great rallies and unforeseen plunges of the cryptocurrency.

This left several investors with huge gains one moment and losses in the other all within a short period of time.

There have been multiple reports of scams and fraudulent activities taken over the ecosystem of BTC coupled with the absence of regulation which further made way into the crypto assets volatility price patterns.

In spite of these pullbacks with an uncertain future ahead for the digital asset in the strictly regulated financial world, Bitcoin performed absolute miracles and has so far outpaced several price forecasts by investment gurus resulting in unpredictable price bubbles.

After maintaining its price below $1000 through 2015 and 2016, what was to follow the crypto-asset could not be predicted by anyone as a price bubble occurred in 2017. 

With more people gaining knowledge about the possibilities of cryptocurrencies and blockchain technology in general, the price of Bitcoin saw a huge surge reaching a high of $20,000 in December 2017.

After such an impressive performance in 2017, Bitcoin gains which should have become a positive for the traditional and decentralized finance world as to new and improved ways of going about business transactions led to a downward spiral in the performance of its price in 2018.

The crypto assets' new all-time high obtained due to high volumes of crypto trading was too much of a price to be held by an unregulated asset as per the analysis of several regulatory bodies across the globe.

Several governments in the world, in particular, the second-largest economy in the world China, banned the trading of all forms of cryptocurrencies in September 2017.

On top of this, several developers decided to compete with BTC for the greater share of the decentralized market and built digital currencies and protocols which are collectively known as alternate coins (altcoins) or tradable tokens.

BTC was miles away from being accepted in the mainstream as a legitimate transactional currency for business activities and the questions about how credible the digital currency is coupled with the scalability issues associated with blockchain technology, resulted in decrease in Bitcoin price of 74.603% of its opening price in 2018.

The New Year 2019 saw an increased interest in digital financial products and BTC still remained the first asset of choice for new and experienced investors when it comes to crypto.

Increased interest on the cryptocurrency reflected in its daily trade volume. Activity on the asset began to see price soar.

After 2019, there was a great future ahead for existing and relatively newer cryptocurrencies as well as tradable tokens until the public health crisis shut down the whole financial markets.

In 2021, Bitcoin (BTC) crossed several price milestones which was made possible by a number of factors.

Before the plummeting of the cryptocurrency as a result of the pandemic, BTC normally rode on speculation and the basis of demand and supply from most crypto-enthusiasts who act at its fans, but 2021 has been different.

There has been a huge influx of cash from investors associated with large scale institutions such as pension schemes, investment trusts and university endowment funds.

Grayscale (the largest digital asset management firm) and Tesla (electric cars, solar and clean energy) have led the purchases with Tesla’s announcement of $1.5 billion investment in the cryptocurrency, certifying BTC as not only a first mover, but the cryptocurrency of choice for well-established institutions.

Bitcoin (BTC) has performed exceedingly well and if it is regulated well whether it increases or falls in price, the price will always go up because new investors will buy the dip with the hope of seeing an increase in the assets price in the near future.

Read Also: A Historical Look At Bitcoin Price: 2009-2022

Pros Of Buying Bitcoin (BTC)

There are several pros of buying Bitcoin which is basically down to the drivers of the coin’s price.  

✅ Bitcoin Has Gained Institutional Interest In Terms Of Adoption Over The Years

It has been clear for some years now that BTC was accepted as an option of payment for several firms but most of them were extremely difficult to define since they were primarily online which brought doubts as to its legitimacy.

In October 2020, PayPal accepted Bitcoin (BTC). PayPal has over 26 million merchants which use PayPal for their business transactions. Including BTC as an option of payment aside Bank Transfer, VISA and MASTERCARD will go a long way to help grow the sector.

On 24th March 2021, CEO of Tesla, Elon Musk tweeted that “You can now buy a Tesla with Bitcoin''. Customers outside the shores of the United States. Later he backtracked on this statement but has recently said it'll be an option again.

After the announcement, the price of BTC made 4.7% gains to a trading price of $56,360 around 4:20 a.m.

This certifies the importance of mainstream institutional adoption of cryptocurrency. 

There have been many adoptions but having one of giants in the technology use BTC as a transactional currency go a long way to communicate to investors the long term potential of the asset if more established institutions adopt it for use in their business operations.

Unlike other cryptocurrencies with unlimited coins which run into the billions, Bitcoin (BTC) Has a Finite Supply. Despite the printing of money by financial authorities yearly, money (fiat currency) is still scarce.

As a result, it has value in the eyes of individuals and business organizations. An asset such as gold has been consistent in its price as a result of being a scarce metal. Scarcity brings about the law of economics which normally sees an asset’s price go up in the process.

Bitcoin was dealt a favour by the anonymous Satoshi Nakamoto as he capped the supply at 21 million. Despite all the purchases which have been made over the past year as the market looked to recover, 90% of BTCs have been mined.

After the remaining 10% has been mined, that is where the real value of BTC as a store of value will take shape. By being scarce, holders of the digital asset will be willing to sell at prices which are set forth by them.

In the process, due to its value and its future promise, more people will be willing to buy Bitcoin (BTC) at a price they are willing to pay.

This may in the long run see Bitcoin, the crypto asset, soar to new heights such as what some analysts are predicting, $100,000, $500,000 or $1,000,000.

There is an unclear future, but with a view on the basic laws of demand and supply, its finite supply will lead to some form of increment in the price of the asset.

✅ Bitcoin Is Listed On All the Major Cryptocurrency Exchanges And Some Online Payment Platforms

Bitcoin trades on Binance, Huobi Global, Bybit, BitZ, OKEx and eToro and it is featured on payment platforms as an investment option.

PayPal and Skrill list Bitcoin as a tradable asset that can be sent, received as well as purchased and stored on a digital wallet for as long as the asset will take investors.

This is the reason why the digital asset receives such numbers in trade volumes. 

Exchanges receive millions and billions in transactional volume daily and this will go a long way to give some form of insurance to investors that there is activity on the asset which would see it move further in price or bottom out for a certain period of time.

For the time being, BTCs volume signals an increased interest and a long term potential in the price of the asset still, considering the awesome trading price it already commands.

Bitcoin (BTC) has gained new fans that are credible large scale institutions and well-established businesses.

Before the financial crash of 2020, Bitcoin was merely a speculative asset that did not have any strong adoptions or integrations to back its constant fluctuations in price.

This led several analysts to feel the cryptocurrency will collapse when there is strict government control since it could be used to send money to anyone no matter where they are in the part of the world which cannot be tracked.

Since July 2020, Bitcoin has seen publicized interest in the asset as a store of value with Grayscale, Tesla, MassMutual and Dubai-based FD7 Venture featuring strongly in the asset’s rally.

Major exchanges, well-known corporations, favourable reserve risk and adoption as a transactional currency bode well for the cryptocurrency and serve as features which could drive the price of Bitcoin further up.

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

Cons of Buying Bitcoin (BTC)

According to several analysts, BTC is not worth its price because unlike other cryptocurrencies which has built great blockchain technologies which can be adopted by businesses as a solution to their inefficiencies with regards to operations, BTC so far only acts as a transactional currency and a store of value.

There are many negatives and cons of buying Bitcoin but among others:

❌ The Price Of BTC Is Too High

Bitcoin is currently trading around $40,000. At such a price, only institutional investors can afford it.

With the volatility associated with the cryptocurrency, you stand a chance of losing a substantial amount of your money which cannot be recovered, since it is highly decentralized.

Trading and investing in Bitcoin unlike stocks or even some crypto assets which have a core team that is visible enough to investors with roadmaps of the milestones which needs to be accomplished within a given period of time, BTC thrives on its first-mover advantage and huge money from well-established institutions.

Once you purchase a full Bitcoin and not a fraction, you will have to hope that a bigger institution with billions of dollars will invest huge sums into the cryptocurrency as a store of value to see its price move up so that you can see real returns on your investment.

Inasmuch as trade volumes play an integral role in determining the future price of an asset, it’s a relatively unseen determinant and plays a partial role in the overall valuation of an asset.

This is because a couple of $100 trades and investments by millions of people trying to make something out of their hard-earned fiat currency would add up to a substantial figure within a given period of time. This does not mean, it would be able to move the price the way you may expect as part of your investment goals.

BTC is an overvalued asset and several HODLers are waiting for more institutional investment before they join the selling queue so that they can also make returns as growth investors.

❌ Bitcoin Faces An Infinite Competition From More Advanced Blockchain Technologies

There are currently over 16,000 cryptocurrencies and tradable tokens on the market. Cardano (ADA) and Tron (TRX) are two cryptocurrency projects which have tagged themselves as “Ethereum Killers” as they aim to claim the largest share of the decentralized finance (DeFi) space. 

Do not forget Ethereum (ETH) employed the longstanding SHA-256 algorithm (proof-of-work) originally used by Bitcoin (BTC) and decided to upgrade its system to Ethereum 2.0 by opting for a proof-of-stake system.

This means BTCs blockchain is relatively outmoded despite several forks which has led to the creation of Bitcoin S.V. and Bitcoin Cash (BCH) scaling relatively faster than the parent crypto.

With a whopping $73 billion locked in DeFi projects as per data retrieved from DeFi Pulse and other cryptocurrencies such as Stellar Lumens (XLM) and Ripple (XRP) offering cross-border payment solutions through their technology while Polkadot (DOT) offers interoperability services for all blockchains and Chainlink (LINK) offers real-time data on-chain, the future of BTC will still hinge on speculation and popularity rather than real world impact.

Bitcoin and Ethereum lead average transaction fees with BTC taken as much as $1.79 while other altcoins such as Tron, Cardano, Stellar Lumens, Bitcoin Cash and Ripple have fees which do nothing to the personal savings of someone living below the poverty line.

❌ Heavy Regulation From Global Financial Bodies May Set In

As more developers try to cash in on the crypto boom, more governments with their regulatory bodies will intervene in the decentralized space to try and bring some centralization into the process in order to ensure the financial safety of their citizens.

China outrightly banned cryptocurrencies, Japan followed and in the first two weeks of the month of March 2021, news from India points to the direction of a cryptocurrency ban in the near future which has brought a lot of heat in terms of discussion on several financial investment websites.

As analyst David Butler of Motley Fool puts it, “At the end of the day, no government is going to allow their currency to play second fiddle to something as completely speculative as Bitcoin”.

BTC can make you money but it can also deplete your funds. At its current price, if you are an investor with small funds, it may be wise to do an extensive research (fundamental and technical) and settle on other altcoins which are relatively cheaper and promise great returns in the future based on its blockchain networks adoption by real world institutions as a business solution.

This will help you to spread the risk, in this process you diversify your portfolio with other assets which have the potential to make up for any future loss which may come your way.

Read Also: 9 Promising Cryptocurrencies To Invest In 2022

What Are Analysts And Experts Advising On Bitcoin (BTC)?

Every price forecast made by several expert analysts, BTC has found an incredible way to surpass it leaving early sellers in the dust as to why did I sell it?

A recent study by Deutsche Bank shows that about a quarter of Bitcoin investors believe Bitcoin prices will be over $110,000 in five years.

According to Finder Panel Predictions by 33 industry specialists, Bitcoin price could reach over $76,000 by the end of 2022 before rising to $192,800 by 2025.

The co-founder of the cryptocurrency lender Nexo, Antoni Trenchev, predicts that Bitcoin could see further upside and surge as high as $100,000 by the middle of 2022.

Ian Balina from Token Metrics believes “Bitcoin can go to $100,000-$150,000, but the timeline is unclear".

As Clem Chambers puts it, “The coin may be worth $1 million someday or may drop down to the normal price levels many people expect it to. This is because its price is being heavily influenced by personal FOMO (Fear of Missing Out) and corporate FOMO and until that impulse passes, nobody can really determine the price of the digital asset”.

Former naysayer, JP Morgan believes the coin’s price will hit $100,000 someday.

Justin Chuh, a senior trader at Wave Financial, thinks that the halving and inflation will see the price surge to sell at $210,000 by 2025.

Goldman Sachs analyst Zach Pandl wrote in a research note to clients that if Bitcoin's share of the "store of value" market were to rise to 50% over the next five years, its price would rise to just over $100,000. The "store of value" here refers to how much the investors own of gold for investment purposes plus how much investors own of Bitcoin. Bitcoin currently has a roughly 20% share of the "store of value" market.

Kraken CEO Jesse Powell told Bloomberg that people need to think of Bitcoin as a five-year investment. He said. "It's more of a buy-and-hold investment."

Analyst at Saxo Bank, Kay Van-Petersen believes “Bitcoin will rise to $100,000 per unit by 2027”.

Wealth manager for California-based investment advisory firm WESCAP, Andy Edstrom, foresees a market capitalization of $8 trillion for Bitcoin (BTC) in the long term.

Founder and Chief Executive Officer (CEO) of Xapo, Wences Casares is extremely optimistic and foresees BTC hitting $1 million sometime before 2027 at a Consensus Conference in New York in 2017.

Founder and partner at Morgan Creek Digital, Anthony Pompliano has predicted BTC to exchange hands at $250,000 by 2022.

Don't Miss: Bitcoin Price Predictions

Where Do I Invest In Bitcoin (BTC)?

As part of our core competencies as an e-learning organization, it is our primary responsibility to ensure we provide credible brokerages and exchanges to our clients and readers.

eToro is the brokerage of our choice because it ticks our boxes in terms of security, scalability and authentication. As a result of the controversies associated with the trading of BTCs, we believe eToro provides the best platform which will meet your trading needs.  

The Bottom Line: Should You Buy Bitcoin (BTC)?

There is no digital asset that is perfect and Bitcoin is no different. As a result of being a first mover (pioneer) in the crypto finance space, Bitcoin has an incredible competitive advantage in investments and adoption as a transactional currency.

If you're holding for the long term and want to own one of the most compelling digital assets, there's nothing wrong with buying some Bitcoins now and simply for peace of mind and adding more if it pulls back. 

Several stakeholders of the coin are doing everything possible to maintain it as a store of value for investors. The primary asset of choice in crypto trading has served as a hedge against losses and has helped several individuals and organizations grow their investments.

Currently, Ethereum (ETH) and Tron (TRX) seem to be the main challengers to BTCs dominance in the crypto trading space. BTC at its current trading price still has technical and fundamental analysis which backs it as a BUY.

Bitcoin (BTC) has created multi-millionaires several times during its crypto boom days in 2017, 2020 and 2021.

But the prices those buyers purchased the crypto asset were relatively cheaper than its current price which has placed a rush for the new golden goose (altcoin) which will bring investors huge gains after missing out on the returns of the parent crypto.

For the time being, BTC remains a speculative asset which can as per the words of Danny Cox from Hargreaves Lansdown (a financial services company) “Remain niche, vanish without a trace, become mainstream or anything in between. Any investment should be considered as very high risk”.

Conservationist, philanthropist and hedge fund manager Paul Tudor Jones in the second quarter of 2020 purchased Bitcoin as a hedge against inflation as central banks around the globe started printing money and compared the digital coin to the gold trade in the 1970s.

As per technical analysis which favours a buying zone for Bitcoin (BTC), predictions of experts, Bitcoin could hit a minimum of $100,000 in the near future.

Perhaps, you can follow the hedge fund manager and purchase a small stake in the cryptocurrency as a hedge against potential losses in other investments.

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Virtual currencies are highly volatile. Your capital is at risk.

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