- As the price of Bitcoin continues to break its price records over the years, investors ponder.
- Is it a good time to buy Bitcoin in 2021?
- So far, Bitcoin has only continued to surge, hence, it is still a solid asset for investing.
Almost every day, Bitcoin (BTC) sets new price records. Since the start of this year, its price has almost doubled. Is it too late to invest in this cryptocurrency, and is it possible to minimize the risks from such investments?
Is It Too Late Now to Buy Bitcoin in 2021?
Those that have been involved in the cryptocurrency world for a few years have heard this question many times before. Every time Bitcoin breaks through a price barrier and sets a new record, people start wondering if it’s too late to buy. So, we need to put this in some historical context.
People asked this question before, first in April 2014, when the price had gone up, and people wondered if the Bitcoin opportunity was already gone. The Bitcoin price when that article was published was $460. That price would increase more than 10x over the next four years.
Then we saw the same question being asked again in June 2018, when the price was $6,500. People wondered if this time it was too late. But again, the price would increase by almost 10x in just 3 years. At these times, it seemed uncertain to buy Bitcoin at record high prices. Needless to say, any investor now would jump at the chance to buy Bitcoin for $460 or even $6,500.
However, these historical observations don’t guarantee that the price will continue to go up. But they do show that Bitcoin has surpassed many people’s expectations time and time again, going up drastically even when some people thought it was already overvalued. Now, in 2021, Bitcoin is still a great investment opportunity.
Benefits of Investing in Bitcoin
The interest of investors in Bitcoin remains high. The coin is even used as a way to lend money and get a passive income in the shape of regular returns. The currency has the best rate of return in comparison to other investment classes over the last decade. More so, it even boasts many other advantages over different types of investments.
The first is the extremely low entry threshold. Almost everyone in the world has access to Bitcoin. Its digital nature means that anyone can get their hands on it. Unlike many traditional investments, the practical and legal barriers for entry are extremely low. There are no qualifications, accreditations, or income tests you need to pass. You simply go online and find someplace or someone who’s selling.
The second is liquidity. You can send Bitcoins anywhere in the world within 10 minutes. There are technologies making the already small transaction fees even smaller. Perhaps, one of the most important ideas is that the liquidity of Bitcoin does not rely on the feasibility of banks. So, even if there’s a financial disaster, your funds can’t get frozen.
Finally, Bitcoin is free from many of the government pressures that plague traditional currencies. There is no additional charge for storing your coins, as is the case with deposits or bank accounts. You truly own your coins, and nobody can control what you do with them.
What should You Pay Attention to When investing in Bitcoin?
While Bitcoin has many advantages, it also has its pitfalls. When investing in any cryptocurrency, there are a few things you need to pay particular attention to.
As stated above, the Bitcoin price did rise from $460 to over $60,000 between 2014 and 2021. However, a quick look at the Bitcoin price chart will show you that it was a very bumpy ride. It’s not uncommon for Bitcoin to rise or fall 10% or even over 20% in a single day, and sometimes, in a few hours.
This high level of volatility isn’t seen in any other kind of investment. It’s common for new crypto investors to panic when the price jumps around too much. When investing, make sure you’re ready to ride out some extreme volatility. A good strategy is not to buy all your Bitcoin at once. Spread out your purchases over weeks, months, or even years. It will minimize the volatility risk in your investment.
Bitcoin also has many unique risks associated with it. The main one is the risk of storing the crypto asset. Unlike traditional banking, you’re usually on your own when it comes to cryptocurrency. If you lose your crypto or someone steals it, it’s unlikely anyone will be able to help you. You need to look out for ways to minimize the risk of losing your cryptocurrency.
Paying attention to regulation is uniquely important in the crypto world. Cryptocurrency is such a new asset class and technology that the rules are changing all the time. Regulations also drastically change from one country to the next. You need to constantly pay attention to investment and tax regulations in your jurisdiction in order to stay safe investing in Bitcoin.
What other investment options are there besides Bitcoin?
Bitcoin is the most valuable, most popular, and most usable cryptocurrency. However, there are other crypto investment options available for those wanting to expand their portfolio.
1. Litecoin (LTC)
While Bitcoin is often called the gold of the cryptocurrency industry, Litecoin is considered silver. It is an alternative way of storing Bitcoin’s value.
2. Cardano (ADA)
It is a decentralized blockchain that aims to solve the problems of Ethereum. Unlike Bitcoin, Cardano uses Proof-of-Stake instead of Proof-of-Work. It means that the production of this currency does not consume as much energy as the mining of Bitcoin and Ethereum.
3. Uniswap (UNI)
Uniswap is a decentralized exchange for swapping ERC-20 tokens. However, due to Ethereum’s high gas prices, transferring Uniswap tokens is quite expensive. (Gas is the amount paid for transactions on the Ethereum blockchain.)
4. Filecoin (FILE)
It is an open-source digital payment system that allows users to store files across the blockchain. Filecoin is showing relative stability in comparison to most other cryptocurrencies.
In 2021, the Bitcoin price may be much higher than it’s ever been. Some people are questioning whether it’s too late to buy in, but the opportunities for investing in Bitcoin remain solid. The cryptocurrency industry is still in its relative infancy and provides many benefits to investors. Most importantly, Bitcoin and the other cryptocurrencies mentioned here still have a huge global market to grow into.