Is investing in Bitcoins a wise decision?
Many people think they have missed the boat and that it is too late to invest in Bitcoin. However, I believe that if you approach it wisely, you can still achieve a good return on investment with Bitcoin investments. In this article, we discuss whether it is wise or not wise to invest in Bitcoin now.
In short: wise investing in Bitcoin in 3 steps
- Open an account with a reliable crypto exchange
- Determine a suitable buying moment to buy Bitcoins
- Invest only with money that you can afford to lose and maintain a long-term vision
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Is it wise to invest in Bitcoin?
It is important to remember that investing ALWAYS entails risks. A higher potential return often comes with higher risks. On the one hand, with Bitcoin, you can achieve enormous returns: smart investors can easily rake in hundreds of percentages annually. However, if you enter at the wrong time, you can also lose a large portion of your investment.
Therefore, as a Bitcoin investor, it is even more important to develop a good plan. Set realistic expectations and decide in advance when you want to buy and sell Bitcoin.
Whether investing in Bitcoin is wise for you, depends heavily on your personal situation. Only invest in Bitcoin if you are willing to take the high risk and have money that you can afford to lose for the long term.
How to invest wisely in Bitcoin?
When investing in Bitcoin, you can focus on the following three things to increase your chances of success.
Tip 1: Invest with a reliable party
Smart investors research the party they invest in Bitcoin with. There are many scammers and unreliable parties active in the crypto landscape. Try out a platform first and test if it meets your expectations.
Tip 2: Securely store your Bitcoins
Always ensure good security for your Bitcoins: there are hackers waiting for you! When you invest in Bitcoin at an exchange, it is important to secure your account. You can secure your account, for example, with two-factor authentication: you can only log in with a code that you receive on your mobile. Even smarter is to store your Bitcoins on a cold wallet. A cold wallet is not connected to the internet, making it less accessible to hackers.
Tip 3: Control your emotions
Smart investors control their emotions. When you start investing in cryptocurrencies, you will discover that prices can fluctuate faster than a roller coaster. Don’t get carried away with the day’s trends and decide before opening a position what your plan is.
As you can see, the price of Bitcoin can fluctuate significantly.
3 things to pay attention to when investing in Bitcoin
Before you exchange your money for Bitcoins, it’s wise to analyze the latest trends. I’ll help you get started by briefly mentioning them below.
Buy low, sell high
The price of Bitcoin constantly moves and is extremely volatile: between 2020 and 2021, the price rose by over 1000% only to halve in a few months’ time. The stock advice of buying high and selling low certainly applies here.
Of course, this is easier said than done: it’s important to ignore the masses as much as possible. When there’s too much optimism in the market, it’s better to stay away from Bitcoin. In the case of bad news, the price can be punished too quickly, which can make buying Bitcoin attractive.
Want to know more about the right time to invest in Bitcoin? Then read our articles about buying & selling Bitcoins:
Sustainability
The environment is increasingly in the spotlight. We also experience the effects of climate change in the Netherlands: think, for example, of the floods in Limburg in 2021 and the absence of the Eleven Cities Tour.
Globally, the environment is one of the biggest threats to the survival of humanity and Bitcoin does not exactly contribute to it. Mining Bitcoins requires an enormous amount of electricity, and much of it is not generated sustainably.
On the other hand, there are also people who expect that when Bitcoins become more popular, the development of sustainable energy sources can get a boost. When the image of Bitcoin becomes more sustainable, it can be wise to invest in Bitcoin. The price of the cryptocurrency will likely rise due to the increased interest.
Bitcoin contributes to climate change
Regulations
As a Bitcoin investor, it’s certainly wise to keep an eye on regulations. In the short term, stricter rules can temporarily drive the price down. In the long term, I’m convinced that better supervision can be positive news for the Bitcoin investor.
When the market is better regulated and fewer “shady practices” take place, there is a greater chance that Bitcoin will also be used by consumers. When more people embrace Bitcoin, this will increase demand and therefore price in the long term.
Why is investing in Bitcoin wise?
- Diversification: with Bitcoins, you can apply more diversification within your investments
- Decentralized: governments and other parties have little influence on Bitcoin
- Unique technology: the technology behind Bitcoin is revolutionary.
- Inflation: Bitcoin can protect you against rising inflation.
- High returns: with Bitcoins, you can achieve high returns.
Would you like to know more in detail why it can be wise to invest in Bitcoins? Then read the article what are the advantages of Bitcoins?
Why is investing in Bitcoins unwise?
- Uncertainty: the Bitcoin exchange rate can collapse at any time
- Hacks: criminals can steal your Bitcoins
- Application: the Bitcoin is hardly used in real life
- Government: more and more governments are putting restrictions on Bitcoin
Would you like to read more in detail why you might want to wait with investing in Bitcoin? Then read the article what are the disadvantages of Bitcoins?
Conclusion: should you invest in Bitcoins or not?
It is important to carefully consider whether it is wise for you to invest in Bitcoins now. For me personally, the answer is clearly YES. However, I do see the risks and I limit my position accordingly. Bitcoin can be an interesting investment to hold alongside stocks, for example.
Investing in Bitcoins is definitely not wise if you prefer to avoid risks. It is also critical to spend more time on your Bitcoin investment, for example, selecting a good buying moment.
What do you think, is investing in Bitcoins wise? Let us know in the comments with a clear YES or NO!
