It is possible to make good money investing in Bitcoin and other cryptocurrencies in 2021. But you can also lose all your money in a short t...
Direct exposure to the cryptocurrency market
The cryptocurrency market has seen a massive upswing in recent months, largely thanks to bitcoin. Therefore, it is undoubtedly a good investment for those who want to get involved in the digital currency market. Leading investment platforms now have automated trading software that makes it easy for beginners to trade at all levels.
Increasing acceptance
Bitcoin and the underlying technology help companies create safe and efficient tools that investors can use to protect and manage their crypto investments. For this reason, several mainstream financial institutions, large technology companies, wealth managers, and retailers are rapidly adopting Bitcoin as a store of value and payment method.
The increasing acceptance of bitcoin is a clear sign that the industry is on its way to maturity. Unlike other financial instruments that are subject to geopolitical influences, Bitcoin has no central authority. This allows users to diversify their wealth around the world as they see fit. Its digital shared ledger ensures you can track your transactions and investments anywhere, anytime.
Bitcoin volatility
The entire cryptocurrency industry is volatile as all assets are decentralized. However, there are a few reasons why Bitcoin is volatile. The volatility results mainly from public perception as presented in the media. For example, in May 2021, bitcoin plummeted about 30% in less than 24 hours amid news that the Chinese government was cracking down on banks processing cryptocurrency transactions.
On the other hand, most of bitcoin's recent gains have come on the back of support from industry leaders like Tesla, which have announced they will accept bitcoin as payment.
The decentralization of bitcoin means that no government or institution can intervene or contain the volatility of the crypto market. Bitcoin's volatile quality also results from its limited supply. And that is also part of what makes bitcoin so valuable; it has a maximum cap of only 21 million.
While Bitcoin has one of the most volatile lifecycles, it has also clearly established itself as a safe and valuable asset class that no investor should ignore. Like other cryptocurrencies and asset classes, Bitcoin is a new form of currency with price fluctuations.
Should You Invest in Bitcoin?
Well, the decision to invest in Bitcoin or not mainly depends on your investment plan and goals. However, the benefits of investing in Bitcoin outweigh the risks.
Acquiring bitcoin holdings is a smart way to diversify your portfolio. Bitcoin price is uncorrelated with stock markets, giving you plenty of opportunities for profitability. As cryptocurrencies gain a foothold in mainstream institutions, experts are predicting immense price increases that would provide huge returns for investors.
Bitcoin is also a good investment because it is secure, transparent, and decentralized. Blockchain technology allows you to keep a clear record of all your assets and access them conveniently. The decentralized bitcoin network allows you to send and receive payments faster and at a lower cost than other electronic payment methods.
If direct bitcoin investing seems risky to you due to the volatility, you can also consider other ways to profit from the breakout. One of the best alternatives is investing in well-established companies with bitcoin holdings. Still, Bitcoin is a potentially good short- and long-term investment.
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