Bitcoin (BTC), the most well-known and largest cryptocurrency by market capitalization, has come a long way since its inception in 2008. The crypto asset has rapidly evolved from an obscure digital asset to a mainstream financial instrument, gaining huge adoption from individuals, governments, institutions, and top businesses worldwide.
At the time of writing, its dollar value is above $70,000 per coin, leading some to wonder if they’ve missed the boat. Given its exponential rise in price over the past decade, the question of whether it’s too late to invest in BTC is one that many prospective investors have continued to grapple with.
In this article, we break down this question, highlighting various factors to consider concerning bitcoin investing.
Why people think it’s too late
One of the main reasons people think it’s too late to invest in BTC is due to its high dollar value. With the crypto asset trading above $70,000 at press time, many feel it’s out of their reach. On the contrary, it is not out of anyone’s reach.
Notably, BTC can be bought in little fractions known as “Satoshis.” Just because you can’t afford one or two BTC doesn’t mean you can’t acquire it in bits. Moreover, the dollar-cost averaging (DCA) approach can be employed.
Also, the crypto market has diversified significantly since the launch of BTC. Over the years, thousands of alternative cryptocurrencies—commonly known as altcoins—now vie for attention, each offering unique use cases and potential. Accordingly, some believe the real growth opportunities lie in these newer, emerging, and less established crypto assets.
Related: Cryptocurrencies: Catalysts for Global Economic Development and Financial Inclusion
Why it may not be too late to invest in bitcoin
Indeed, the leading crypto asset has rapidly grown in value in the past decade. However, BTC still holds great growth potential both in terms of value and adoption.
First, BTC is commonly referred to as “digital gold” and a store of value. As more people and institutions seek to hedge against inflation and economic uncertainty, BTC’s role as a safe haven asset could drive demand further, potentially pushing its price higher.
Moreover, with its total supply capped at 21 million coins and the halving phenomenon, BTC is designed to be inherently scarce. This scarcity and limited supply further makes BTC attractive to individuals and institutions
Notably, bitcoin halving occurs every four years. It is a pre-programmed event where the number of new BTC created in each block (known as block rewards) is cut in half. Historically, these halving events have been followed by significant price increases as the reduced supply puts upward pressure on the price.
In addition, institutional adoption is a game-changer. Major companies like Tesla and MicroStrategy have added BTC to their balance sheets, and several financial institutions and global asset managers are increasingly offering bitcoin-related products to their clients such as spot BTC exchange-traded funds (ETFs). This legitimization could pave the way for even more widespread acceptance and investment in BTC.
With crypto regulation gradually taking shape in several jurisdictions, there could be an opportunity for more growth in BTC’s price. In essence, clearer rules could make institutions and individual investors more comfortable entering the BTC market, leading to greater demand and price stability.
Read more: What is Bitcoin (BTC) and why is it important?
Factors to consider before investing in bitcoin
1. Your investment plan
Are you looking for quick profits, or are you willing to hold for the long term? Bitcoin has historically rewarded those who held on through the ups and downs.
2. Risk tolerance
Bitcoin remains a highly volatile asset. It’s not uncommon to see double-digit percentage swings in a single day. Can you stomach this kind of volatility, or would it cause you sleepless nights?
3. Diversification
Even if you believe in Bitcoin’s potential, it’s wise not to put all your eggs in one basket. Diversifying your investment across various assets, including other cryptocurrencies, stocks, and bonds, can help manage risk.
4. Do Your Own Research (DYOR)
Bitcoin isn’t just a stock or a commodity; it’s a new kind of money, and understanding its fundamentals, the technology behind it, and the market dynamics at play is crucial before making an investment decision.
A word on timing the market
Many investors are drawn to the idea of “timing the market”—buying low and selling high. However, even expert technical analysts struggle with this. Trying to predict BTC’s short-term price movements can be like trying to catch a falling knife.
A more prudent approach could be “dollar-cost averaging,” where you invest a fixed amount at regular intervals regardless of the price. This strategy helps mitigate the risk of entering at a market peak and can lower your average purchase cost over time.
Read more: The Ultimate Guide to Crypto Investing
Final thoughts
So, is it too late to invest in bitcoin? The answer largely depends on your perspective and investment goals. It might still be a good time to get in if you believe in the crypto assets’ long-term potential as a store of value and a hedge against inflation, and economic uncertainty. Nonetheless, if you’re looking for the kind of returns early adopters enjoyed, you may need more capital.
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