Bitcoin is a highly volatile cryptocurrency with a history of “boom and bust” cycles, in which its price surges and then plummets. So when the best time is to buy Bitcoin is a very good question!
Bitcoin had been performing brilliantly, reaching an all-time high in April. However, starting last month, the price has been declining.
And with declining, I mean a proper freefall! In only 57 Days is gone from its all-time High of 63´370.47 to 32´030! that’s almost half of its high a month and a half earlier! A 50% drop! So now might be the best time to buy bitcoin but we will look more in detail later.
The following points will be discussed in this Story:
- Why is bitcoin’s value plummeting?
- Will the price of cryptocurrencies recover?
- Is snow the best time to buy Bitcoin?
- Before you become involved, there are a few things you should think about.
Why is bitcoin’s value plummeting?
Bitcoin has recently faced a number of challenges.
- Bitcoin is a “scam,” according to Donald Trump since it competes with the dollar.
- FBI agents seized millions of dollars in bitcoin from criminals, causing the currency’s price to plummet by 8%.
- Bitcoin’s value plummeted last month after Elon Musk revealed that his electric car firm, Tesla, would no longer accept cryptocurrency payments. In a Tweet on May 13, he voiced concern that Bitcoin was harming the environment.
The banking authority has issued a warning that a “substantially large proportion” of bitcoin businesses are failing to meet the Money Laundering Regulations’ requirements. As a result, some businesses may be compelled to close.
Demands for further regulation are considered as a danger to crypto’s decentralization, which is affecting its price. China halted operations of key cryptocurrency mining companies in mid-May, causing the value of ethereum, dogecoin, and Binance Coin to plummet.
According to Susannah Streeter, Senior Investment and Markets Analyst at Hargreaves Lansdown, “the restriction on Chinese banks and payment providers providing crypto transaction services had already been a huge setback for Bitcoin’s use case.”
Is bitcoin considered legal tender?
El Salvador may become the first government to make bitcoin legal tender, despite the fact that it is not currently an official means of payment.
The country’s president announced at a bitcoin conference that he aims to make bitcoin a formal form of payment to make it easier for Salvadorans working overseas to send money home.
Do you lose money if bitcoin goes down?
Only if you sell bitcoin for less than you paid for it will you lose money, a process known as “crystallising your losses.” You are not technically losing money if you leave your money invested when the price of bitcoin is low.
When prices fall, some investors panic and sell, but it’s usually wiser to keep your money invested in the hopes that prices will increase again.
Will bitcoin prices recover?
It’s impossible to know for sure. The most likely reason for bitcoin’s resurgence is if the cryptocurrency’s mining and maintenance become more environmentally friendly.
The crackdown in China, as well as proposals for further regulation around the world, may have an influence on crypto’s decentralisation.
Given its erratic nature, it’s feasible that bitcoin will regain popularity at some point in the future (perhaps weeks, months or even years down the line).
But keep in mind that if it rises too quickly, it may collapse just as quickly. This is due to the fact that bitcoin’s price is purely reliant on speculation. To put it another way, it’s a risk, therefore don’t put all of your hard-earned money into bitcoin.
Is now the time to buy Bitcoin and is it smart?
You could have made a fortune in bitcoin if you were intelligent or lucky enough to be an early adopter.
Satoshi Nakamoto, the enigmatic developer of bitcoin, is thought to have made $40 billion (£29 billion) from it, and there is a slew of additional bitcoin billionaires and millionaires.
Most small-scale investors, on the other hand, have just recently gotten interested in the crypto market as it has become more extensively discussed (or hyped up, depending on your perspective). Following the latest crash, some inexperienced investors who sold bitcoin may have lost money.
I have a Story on “5 Reasons to buy bitcoin” and it might interest you if you want to get into crypto or bitcoin.
Should I buy bitcoin?
You should make certain that you understand why you are investing in the first place.
Many people have been enticed to invest in bitcoin for the incorrect reason: a fear of missing out. As a result, they take the risk of purchasing bitcoin when it is extremely pricey, putting them at a far higher danger of losing money.
Before investing in bitcoin, financial management Quilter’s Rick Eling highlighted six things to ask yourself:
- Isn’t it more expensive now than it was a few months ago if I bought it now?
- Is there any evidence that prices may climb much farther than they are now?
- Why didn’t I look at this asset when it was a lot cheaper if it’s so great?
- Have I persuaded myself that I am “in the know” in some way?
If you don’t know the answers to these questions, investing is usually not a wise option. If you do decide to acquire bitcoin, make sure you aren’t putting money on the line that you don’t need.
Has bitcoin’s bubble burst?
When the price of an asset rises rapidly, a crash or, at the very least, a correction (when the price goes back to a more “normal” level) is more likely. That is the current state of affairs for bitcoin.
Bitcoin was in a bull market (meaning it was increasing in value — bear markets decrease in value, often in a flash crash): it took 11 years for the cryptocurrency to reach $20,000 a coin, but just three weeks for the price to double from there.
Its recent climb has been spectacular — bitcoin has risen more than 700% in the last year, with a single bitcoin reaching an all-time high of $63,000. Is Bitcoin, on the other hand, a long-term investment?
Bitcoin could turn out to be “the mother of all bubbles”
If you believe the crazy price predictions from crypto lovers praising the cryptocurrency market and their investments on the financial market for capital gains, it’s a sensible investment right now.
To put the price spike in context, the crypto-data firm Coin Metrics claimed that cryptocurrencies lost more than $150 billion in value in one day in January, showing the sector’s volatility.
“It might start to ease but not for a good while because you’ve got so much speculation surrounding it — that’s what’s driving those wild swings in price.”
Fiona Cincotta, senior markets analyst at trading house City Index
Big brands, on the other hand, are paying special attention to bitcoin and other cryptocurrencies now that the cryptocurrency market is in a bull market, with some of the first to accept bitcoin being:
This could lead to more price stability, reducing the severity of price swings and it is also a sign that it might be time to buy Bitcoin or at least start to consider it.
Is bitcoin still a good buy?
This year’s price rise could be even higher, especially if celebrities like Tesla inventor Elon Musk continue to show their support for bitcoin on social media and in the business press.
Fiona Cincotta, a senior markets analyst at City Index, believes it might grow to around $80,000, but cautions that forecasting the bitcoin price is notoriously difficult because to its complexity in valuing it.
She goes on to say that investing in bitcoin requires “very bravery.”
“Any money you invest in bitcoin, you just have to accept it’s lost — and then if it makes a fortune for you, it’s money well spent.”
Fiona Cincotta, senior markets analyst at trading house City Index
Will bitcoin go up or down in 2021?
Bitcoin is expected to surpass $100,000 or more by the end of 2021, according to some crypto-market gurus.
However, it has lost roughly 80% of its value on multiple occasions in the past, and investors can’t predict where it will go from here because of the extreme volatility.
Whatever your point of view, there’s no doubting that these “boom and bust” cycles have been a part of bitcoin’s whole existence, so some significant ups and downs appear to be a certain conclusion. In a nutshell, it’ll be a wild voyage.
How severe could a crash be?
Over time, the scale of the price drops has been less striking.
- 2011, bitcoin fell 91%
- 2014, bitcoin fell 85%
- 2018, bitcoin fell 83%
- 2019, bitcoin fell by 50%
Apart from short-term price drops, the cryptocurrency could face even more serious long-term issues.
- Ray Dalio, a billionaire hedge fund investor, believes the US government will try to outlaw bitcoin. It is seen as a promoter of “illicit finance” by Treasury Secretary Janet Yellen.
- According to some analysts, China might crackdown on crypto. Potential prohibition in India could be part of a broader regulatory campaign against cryptocurrency.
- Even if cryptocurrencies are not overtly banned, greater measures to regulate them may be made.
- The Financial Conduct Authority in the United Kingdom takes a dim view of them, warning that they are harming customers.
- The FCA has already prohibited the marketing of derivative instruments based on cryptocurrency values to ordinary investors in the United Kingdom.
Regardless of how optimistic investors are about the bitcoin price, they will need to keep a watch on the regulatory environment.