Bitcoin stands out today as a real currency, but also a long-term investment tool. This asset, admittedly volatile, has grown by more than 300% in one year! A boon for fearless investors.
Before getting started, there are many things to know: where and how can you buy Bitcoins? Which strategy to apply? What influences the price? Discover our guide to buying Bitcoin.
Why invest in Bitcoin?
Betting on the currency of the future
Investing in cryptocurrencies such as Bitcoin (or others, which are called altcoins and which are the subject of a separate article), is to bet that their use will become widespread as a means of exchange of goods and services. Indeed, Bitcoin was created to give more transparency to payments: it allows you to pay someone
directly without the money passing through a third party (a bank or a state institution). Although we do not believe that they will replace official currencies, they could nevertheless become alternative means of payment. If this is indeed the case, then their values should mechanically increase over the long term. Want to know more info about this? Just visit this site.
It is already possible to pay in Bitcoin in 2022!
Moreover, it is a very liquid value (that is to say, it can be easily resold or exchanged for goods and services) which makes cryptocurrencies a useful and usable asset. We can pay a lot of things in cryptocurrencies directly: in fact, nothing prevents us from paying someone with Bitcoins, since this currency is becoming more and more important everywhere in the world… as long as the person is agreement to receive payment in cryptocurrency, and this is already the case for some websites!
To facilitate this, today there are “crypto cards”. Indeed, brokers have launched their crypto bank card, Visa cards allowing you to pay from anywhere with cryptocurrencies such as Bitcoin, altcoins or fiats (i.e. by automatically converting the bitcoins you own into euros, dollars, or other currency to be able to make the payment). It estimates that in the end of 2022, 221 million people worldwide would have traded cryptocurrencies. Another proof that crypto-assets have truly democratized.
Potentially very attractive returns
If Bitcoin has become so famous, it is not only for its revolutionary or state-independent payment system, but above all for its enormous and unpredictable growth in recent years. We all have in mind the meteoric curve of Bitcoin at the end of 2017, rising to $20,000 per Token (or Bitcoin “token”). The second peak was even more impressive: on April 14, 2021, Bitcoin’s high point was over $64,000, before it crashed and lost almost 50% of its value (the classic patterns after a such a rise, which we can refer to as the “collection” of capital gains). Since then, the price has risen again, but it is unclear if Bitcoin will breach a new high – and when.
Many things now influence the price of Bitcoin: initially it was just the pure law of supply and demand. But now, many events can lead to significant buying or selling movements. Thus, we could see that several tweets from Elon Musk, the founder of Tesla (announcing that he was going to accept Bitcoin as a means of payment, then retracting), had had significant consequences on the price of Bitcoin. Announcements such as the purchase of Bitcoin by a country or a company, or the future listing of exchanges like Binance can also have upside effects, while the ban on Bitcoins and mining in China has led to a decrease. Thus, the price of Bitcoin is always like a roller coaster…
But it is because the course of Bitcoin (which brings with it Ether, Ripple or even Litecoin since all altcoins are more or less indexed to it) is always volatile that investors see opportunities there! Nevertheless, we always recommend caution with this type of asset, because it is difficult to project into the future and to manage to imagine what the future of cryptocurrencies will be. This is why we have some recommendations for those who wish to start buying Bitcoins with the aim of investing, so as not to leave feathers there but, on the contrary, to leave with beautiful capital gains.
Who says volatile assets, says possibilities of losses. Before embarking on the world of cryptocurrencies, the first thing to do is to set a limit of funds to invest and not to exceed it, because this money, if it can bring in money, can also be lost. Therefore, investing in Bitcoin is not recommended for people with high risk aversion.
How to limit the risks?
We have therefore seen that there is no certainty as to the gains that can be made by betting on Bitcoin. This is why we have three tips to limit the risks and bet on cryptocurrencies with serenity.
Invest money that is not essential. Many buyers lose their bet by being afraid of a decline or by becoming impatient, so it would be dangerous to invest all your savings in Bitcoin in the event of a collapse. You will first need to build up precautionary savings of around four months’ salary, available in a savings account in the event of a hard blow.
Do not bet all your capital on a single crypto-asset. The prices of cryptocurrencies being all very volatile, it is advisable to invest in the largest virtual currencies such as Bitcoin first, but also Ethereum, Ripple or Binance Coin which are the subject of an article dedicated to the investing in altcoins. Thus, if one of them collapses, the breakage will be limited and it will always be possible to collect your winnings if another rises dramatically.
Multiply entry points. If you are implementing a strategy with a long-term horizon because you believe that Bitcoin has not yet reached its peak, it is advisable to invest regularly and constantly, in order to hedge yourself in the long term from the effects of Marlet. This will increase the chances of ultimately generating a positive return.
How to buy Bitcoins?There are two ways to get your hands on Bitcoins or another cryptocurrency:
- Sell a good or service and request payment in crypto-assets such as Bitcoin. This can take time since not everyone has Tokens in their pocket.
- Convert your dollars (or another regulated currency, also called “fiat currency“) into virtual currency using an exchange platform (exchange) or a broker specializing in crypto-assets (brocker), which remains the most simple and most used. Among other things, this allows you to easily trade Bitcoin and to be able to pocket your earnings in dollars quickly.