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What To Know If You’re New To Bitcoin Investment

Bitcoin

The past year has been something of a disaster for cryptocurrencies, and for Bitcoin in particular. Indeed, even after a few brief bounces of late, the price of Bitcoin has dipped below $20,000 –– almost unprecedented territory since late 2020.

Naturally, the prolonged crash has caused a lot of people to question whether or not they want to be involved in Bitcoin investment at all. At the same time however, there are also those who argue in favor of a “buy the dip” strategy. Just recently for instance, experts in the space quoted at NextAdvisor stated that Bitcoin is undervalued, implying that it is effectively “on discount.” They suggested Bitcoin could still be worth $100,000 in two years’ time, and effectively indicated that those “buying the dip” could stand to profit.

Only time will tell if this winds up being a sound, logical strategy. Whatever ends up happening though, it is safe to say that talk of Bitcoin’s “discounted” price and remaining potential to surge is likely to attract a wave of new crypto investors. Many felt they missed out on the last Bitcoin surge, and will be eager to take part in the next one.

So for those who may only now be exploring entry to crypto and Bitcoin specifically, here are some important things to know:

Buying in is Simple

When Bitcoin has boomed in the past, it has done so alongside waves articles explaining the process to people. Crypto has not always been viewed as the most inclusive or intuitive field, and thus some would-be investors have found themselves confused as to how investment actually works. Today however, the process is simpler than ever before. By this point, there are dozens of reputable crypto exchanges –– such as Robinhood, Binance, Kraken, Coinbase, and Crypto.com, to name a few –– where Bitcoin can be bought, held, and sold with ease. In short, there is no longer any reason to let the process stop you.

It’s About Speculation vs. Risk

While some do look for quick, day-trade-style transactions in crypto –– and others look to spend their digital currencies –– many buy Bitcoin as a speculative investment. This is basically a way of saying that they invest in the hopes that Bitcoin’s value will skyrocket over time –– rather than with an aim to sell or use it in a few days or weeks. Knowing this, you can begin to look at Bitcoin investment in fairly simple terms: It’s about speculation vs. risk. You’re best off trying to determine how much you can realistically hope to gain in the future, and then deciding what amount of investment you’re willing to risk on that hope.

Long-Term Predictions Remain Lofty

When we say this, we should also specify that there are those who believe Bitcoin is essentially mortally wounded –– that its stumble over the last year has shown it to be a weak and unreliable asset. When it comes to speculative investing though, it’s also worth mentioning that even now, in the fall of 2022, there are some very lofty long-term predictions. As recently as this past January for instance, when Bitcoin was in the midst of a prolonged and dramatic slide, Fortune posted about experts who were still talking about a $100,000 price point in the near future. This is not to say that these predictions will necessarily come true. But it is important to recognize that even now, there are knowledgeable people who remain bullish on the long-term prospects.

Diversification is Still Recommended

If you are considering investing in Bitcoin now or in the near future, it’s also important to bear in mind that diversification is still a recommended strategy. By this we simply mean that it’s wise to invest in a range of assets, rather than just a big bundle of Bitcoin. Particularly in volatile markets (like crypto), this is a necessary strategy for preventing sharp, sudden, and heavy losses. With money spread out across assets, you’re less likely to be hurt if one of them crashes, and more likely to see net gains across the board.

The most important thing in the end is to do thorough research and make a decision about investment based on your own financial outlook. With “buy the dip” becoming a common idea regarding the state of Bitcoin though, we hope these suggestions and insights will help you if and when you decide to get involved.

Opinions expressed by Coin Week contributors are their own.

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