Should You Buy Bitcoin While It’s Below $18,000?

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The Bitcoin cryptocurrency (BTC 3.64%) is much cheaper than it used to be. Bitcoin prices have remained below $18,000 for over a month at this point. Is it a good time to buy cheap Bitcoins?

A Brief Overview of Bitcoin’s Recent History

Once upon a time, around 13 months ago, the price of Bitcoin hit $68,790. The cryptocurrency had more than quadrupled in value in 12 short months. The sky was the limit. The crypto market as a whole was worth over $3 trillion. Six-figure pricing seemed to be coming shortly. Life was good for cryptocurrency holders.

But the market took a different turn then, and November 10, 2021 turned out to be the peak of that particular Bitcoin bull market. The omicron variant of COVID-19 was poised to upend the economy again. Runaway inflation was next on the menu, alongside the Russian attack on Ukraine and a global disruption of long-distance shipping services.

At first glance, none of this seems to be driving down Bitcoin and other cryptocurrencies. On the contrary, Bitcoin was meant to be an effective hedge against inflation. If the dollar in your wallet loses value over time, a completely separate monetary system that has nothing to do with national banks and political agendas should remain stable, increasing its value against the dollar.

Unfortunately, many investors dismissed this idea in the turbulent 2022 market, instead bundling cryptocurrencies with unprofitable growth stocks and other high-risk investments. In this time of economic crisis, these risky bets have been widely verboted in 2022.

Worse still, the crypto sector has brought additional risks to the party. Stablecoins have lost their rock solid footing. Crypto lenders could not cover the exorbitant interest rates they promised investors. One of the largest crypto exchanges in the world has collapsed and filed for bankruptcy protection.

All of these issues have plagued Bitcoin over the past year. In total, the biggest and oldest name in crypto fell to $17,100. That’s a 75% drop from that brief moment in record-breaking sunshine 13 months ago.

Image source: Getty Images.

Is the Bitcoin community planning something big?

Bitcoin does not have any game-changing plans at this time. The code tree has no pending or planned changes. The Node Developer mailing list is full of housekeeping notes, dealing with minor issues but not exactly driving Bitcoin in new directions.

Remember the capacity scaling projects of major altcoins in recent months, such as EthereumMerge or CardanoVasil? These code forks made fundamental changes to how each cryptocurrency works, configuring Ethereum and Cardano for faster processing, lower power consumption, and lower transaction fees.

The developers of Bitcoin do not foresee anything like this.

A few minor upgrades and bugfixes are bubbling under the surface, but everyday Bitcoin users and investors probably won’t notice them. You don’t change a winning team. People have tried to make significant changes to Bitcoin’s core platform over the years, creating so-called hard forks such as Bitcoin Cash and Bitcoin Gold, but the ramifications have never really challenged Bitcoin’s currency. origin. Any attempt to make further changes is likely to result in another almost forgotten hard fork, while the original Bitcoin continues to function as before.

A vocal minority suggests that Bitcoin should follow Ethereum’s lead and replace the power-hungry proof-of-work (PoW) system with a lightweight alternative such as proof-of-stake (PoS). However, traditionalists argue that this change would undermine Bitcoin’s security model. It takes a massive investment in mining hardware and electrical power to take control of the Bitcoin blockchain via a 51% attack. PoS systems can’t match this fundamental security feature, so I expect PoW and Bitcoin mining will be around until someone invents a better hacking idea.

Of course, buy Bitcoin as long as it’s cheap (but not too cheap)

Bitcoin was not only the first out of the gate, but it also came with a fundamentally robust platform. It is easy to understand and use. In the 14 years since Bitcoin’s original white paper, no one has come up with a significantly better model for decentralized and secure financial transactions on a global scale.

I can’t guarantee that Bitcoin will fulfill this role forever, so I don’t recommend converting all your money into Bitcoin tokens. But this revolutionary system of digital transactions and value storage has an undeniable long-term advantage. MicroStrategy President Michael Saylor believes that Bitcoin will replace gold as the repository of long-term value, potentially driving prices up to at least $500,000 per coin over the next decade. Cathie Wood, CEO of ARK Investment Management, sees Bitcoin surpassing the $1 million mark by 2030. If they’re a few zipcodes away from the right stage, Bitcoin at $17,000 will look like a huge “buy” sign flashing neon sign looking back.

Chances are Bitcoin investors buying today for less than $20,000 per token will be worth many times that in eight to 10 years. There is also a lower risk of something going wrong on the way to that station, and Bitcoin never takes the throne of investment-grade gold. In this case, you’ll be glad you didn’t literally bet the farm on this exaggerated opportunity.

The sensible thing to do, therefore, is to treat Bitcoin like any other investment. Buy some if you believe in the long-term growth story, but stick to an ordinary position – just like any other stock, bond, or mutual fund in your properly diversified portfolio.

And I’m not here to sell you Bitcoin. If you prefer to stick with the more traditional investments that have served you well so far, that’s also perfectly fine. Only you know what best suits your own investment strategy, and Bitcoin is just one of the many options available.

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