An increasing number of investors are seeking exposure to Bitcoin, the world’s largest cryptocurrency. First-time investors seeking guidance should read on. In this guide, we explore 10 reasons why Bitcoin is here to stay – alongside some tips on how to enter the market safely and cost-effectively.
Bitcoin attracts many investors – especially those targeting life-changing gains. The numbers speak for themselves – very few assets have outperformed Bitcoin since it was launched in 2009. According to Investing.com data, Bitcoin was trading at just $0.10 in 2010 – which is the earliest recorded price provided. Fast forward to today, and Bitcoin is trading at approximately $30,000. This translates into growth of millions of percent – far outpacing traditional assets like stocks and real estate.
Bitcoin's underlying technology – the blockchain, increases its investment thesis. For example, Bitcoin is suitable as a medium of exchange. Cross-border transactions take just 10 minutes and rarely cost more than a few dollars. Bitcoin is also transparent, with transactions being posted to the blockchain ledger.
There is an argument for Bitcoin’s use as a store of value. It has a limited supply of just 21 million tokens. Currently, 19.4 million tokens are in circulation. Bitcoin cannot experience inflation either. Just 6.25 new Bitcoins enter the market every 10 minutes. This ensures complete predictability of Bitcoin’s supply.
Bitcoin is also decentralized. It is not controlled by any single entity and isn’t backed by a central bank or government. Moreover, transactions do not need to go through a third party. This ensures that Bitcoin is inclusive and censorship-free.
During the most recent bull cycle, Bitcoin went from lows of $4,800 to highs of over $68,000. This represents growth of over 1,300%. Bitcoin is now trading at a bear market discount of approximately $30,000. This enables investors to enter the market 55% below its prior peak.
Bitcoin's long-term viability is reinforced by its role as a hedge against inflation. With a strictly limited supply and falling inflation rate, it provides a safeguard against currency devaluation.
More traditional finance firms are investing in the market, recognizing Bitcoin's potential as a legitimate asset class.
Ongoing technological advancements, such as the Lightning Network, enhance Bitcoin's scalability and usability.
Bitcoin is gaining acceptance worldwide, with more merchants and businesses accepting it as a form of payment.
Including Bitcoin in a diversified investment portfolio can provide exposure to a non-correlated asset class.
In summary, while Bitcoin offers exciting opportunities, it remains a risky investment. Investors should conduct thorough research and consider their risk tolerance before deciding to invest. However, the reasons outlined above demonstrate why Bitcoin continues to be a compelling choice for many in 2024.
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