Is it still worthwhile to buy a Bitcoin investment or wait?
To say that 2022 has been difficult for cryptocurrencies would be a century-long understatement.
The cryptocurrency industry has experienced setback after setback this year. Since late 2021, prices have been progressively declining, and Terraluna’s outburst earlier this year raised concerns about the cryptocurrency’s future. After FTX’s collapse, investors are now even more dubious.
It makes sense if you are afraid to invest in Bitcoin right now. Even some specialists are in disbelief at what happened.
But given that Bitcoin prices are currently at historically low levels, this might be a fantastic time to buy. So, is it the best time to invest in Bitcoin or wait? What you should know is as follows.
Is Crypto Currently Secure?
Investments in cryptocurrencies like Bitcoin are inherently dangerous and always have been. There are currently no guarantees of long-term success because it is still speculative.
Make sure you have a high-risk tolerance before considering investing in Bitcoin or any other cryptocurrency. Make sure the rest of your portfolio is sufficiently diversified to reduce risk and only invest the amount you can afford to lose in actual terms. Although worrying, occurrences like the FTX breakdown shouldn’t be mistaken for an increase in Bitcoin risk. FTX wasn’t a cryptocurrency issue; instead, it was a bad company leadership choice. That is possible in any industry (consider the demise of Theranos, for example).
A certain amount of danger is always present with cryptocurrencies, and not all investors are satisfied with them. Particularly after the FTX scandal. However, it has the potential to provide a big return if the price even slightly rises.
Why Did Bitcoin Lose Ground?
The cost of Bitcoin and several other significant cryptocurrencies is expected to decline in 2022.
As investors reduced their risk-taking level due to rising inflation and interest rates, cryptocurrency prices plummeted with those of stocks and shares.
In November 2022, the price of 1 Bitcoin fell to $16,000. According to the Breet rate calculator, 1 Bitcoin is currently worth roughly $17,000 (N12, 495,000). This is a significant decline from the record high of $69,000 reached in November 2021.
The current chaos was brought on by:
- Major cryptocurrency exchange FTX filed for bankruptcy after being unable to sell its assets. This impacts other crypto exchanges.
- Risky assets are being sold as a result of uncertainty over rising US and UK interest rates and declining Naira value.
- Investors have less discretionary income due to a cost-of-living issue brought on by growing inflation, which means they have less money to spend on Bitcoin and other cryptocurrencies.
- Countries forbid trading in cryptocurrencies.
- Suggests Russia might outlaw cryptocurrency mining and trade, which would cause prices to fall.
- Additionally, there was the potential for future regulation of Bitcoin investments.
Let’s examine the causes of the cryptocurrency drop in more detail here.
Can Bitcoin Survive This Fall?
To be frank, nobody knows what the future of cryptocurrencies will bring. But because it is the biggest and most well-known cryptocurrency, Bitcoin has an advantage over many others.
Moreover, a third of the $822 billion global crypto market, or about $318 billion, is made up of Bitcoin at the moment. Given its enormous size, Bitcoin has a significant advantage, making it the most likely cryptocurrency to be held over the long term. Large institutional investors like it as well. Cryptocurrency investors may feel comfortable entrusting their money to giants like Bitcoin as more and more investors become weary of lesser altcoins.
Bitcoin hasn’t been impacted as hard as other cryptocurrencies because of institutional investors, and they may also be crucial to its long-term growth.
However, Bitcoin is not without flaws. For instance, it still has issues with power consumption and lengthy transaction times, and it is questionable if it would be a reliable inflation hedge. Before buying, it’s crucial to be aware of the hazards associated with Bitcoin because it is not completely secure.
However, Bitcoin is currently trading at a multi-year low. The price per token is currently around $16,500, down from the peak of around $70,000 per token set last year. It may be now if you’ve been waiting for the ideal time to invest in cryptocurrency.
Is it Good to Invest in Bitcoin Now or Wait?
Even specialists cannot predict how cryptocurrencies will perform in the coming years.
Any investment has the potential to fail, and you could end up losing money.
The possible benefits, nevertheless, might outweigh the hazards. If you had invested $1,000 into Bitcoin five years ago, you would today have almost $2,100. In other words, you will still have more than twice as much money despite all the issues cryptocurrency has faced (including the fact that Bitcoin is currently down more than 75% from its peak).
Once more, there are no assurances that Bitcoin will endure in the long run. Even if the price doesn’t reach all-time highs any time soon, you can still make a lot of money if it recovers by investing now.
Things to Think About Before Buying Bitcoin
Cryptocurrencies have risks and possible rewards, just like any other investment. Compared to conventional forms of investment, cryptocurrencies are especially risky.
Before making an investment, consider the following:
- Never advise someone to put their entire savings into the Bitcoin market.
- It is preferable to compare it to gambling. So, just invest a tiny portion of your available funds, and be ready to suffer significant losses.
- Don’t risk more than you can afford to lose by investing.
- At the end of the month, if you don’t have much money left over, it’s a good idea to avoid investing in cryptocurrencies and concentrate on conserving cash.
- To increase your chances of success, approach cryptocurrencies as a long-term investment instead of a short-term one, just like traditional assets. Because of their high volatility and vulnerability to bull markets and market crashes, cryptocurrencies
