Is Bitcoin still a good investment?
- 28 November 2022
- Posted by: Vincenzo Stefanini
- Categories: Financial News, Investing & Trading, Money
What is Bitcoin?
Bitcoin (BTC) is a cryptocurrency, a digital currency, which can be used as a form of payment.
The main feature is that it’s not controlled by a single entity, a single person or a company.
It’s a peer-to-peer system, that doesn’t require a trusted third party.
How has Bitcoin performed in the past?
Bitcoin can be purchased on several exchanges, allowing investors and traders to buy and sell it for a profit.
The price of bitcoin is very volatile and it’s a risky investment, however, it can provide asymmetric returns, where the potential upside is greater than the downside.
High volatility means also high potential returns.
During the bear market, it can drop between 30% and more than 90%, however, the gains are far higher than other assets during the bull market, as you can see from the picture below.
If you can manage your emotions and remain calm during a bear market period, like the one we are in right now, you will make high returns.
The gains always beat the losses over a long period.
Bitcoin price forecast
In the short term, the price is influenced by many factors: central banks worldwide are increasing interest rates and reducing the balance sheet to bring inflation down and a major crypto exchange collapsed recently because it didn’t manage properly the client’s funds.
This creates uncertainty and fear, so we can expect the bitcoin price to drop further in the upcoming months until central banks’ monetary policy will revert to low-interest rates and more liquidity is injected into the economy.
However, the strong fundamentals of bitcoin and the limited supply (there is only 21 million bitcoin available and this cannot be increased), suggest that the price will move higher in the upcoming months.
The next Bitcoin halving (the feature that cuts by half the number of new bitcoins being generated by the network), is estimated to happen in early 2024.
This event has been a catalyst in the past for a huge spike in bitcoin prices.
In summary, even if the short term looks still uncertain, it’s always a good time to start buying and accumulating bitcoin for the long run.
With this in mind, investors should be happy that the price is dropping, as they can buy more with the same capital.
How to invest in Bitcoin
If you are a beginner and don’t have experience with trading and investing, I recommend using the eToro CopyTrading functionality, which allows you to copy professional traders automatically.
I currently manage an investment portfolio on eToro and many people are copying my portfolio.
If you want to learn more check my Investment Portfolio.
My portfolio strategy
I am holding my current LONG (BUY) positions on Bitcoin and other cryptocurrencies like Ethereum (ETH) in my portfolio.
I am planning to increase my exposure only when the price starts falling further to the specific levels I have in mind.
If you are already copying my portfolio, remain invested and keep the copy open.
If you are new, you can start the copy with a lower amount and add more every month.
Vincenzo Stefanini
eToro Popular Investor
Follow me on social media
