Are you unsure about investing in Bitcoin? Here is what can help you better understand

[ad_1]

The cryptocurrency market has witnessed a bull run over the past month. Bitcoin has plunged almost 50% from its all-time high of 46 lakhs in three months. The drop left investors split in two – some rushing to sell to save losses and others holding their stake faithfully with hope for the future. Despite the huge drop in Bitcoin and other major cryptocurrencies, things are not looking bad in the cryptocurrency market.

According to crypto analysis site Glassnode, holders and institutional players are taking this opportunity to double their investment in Bitcoin, which shows their confidence in the asset class. Additionally, retail investors are benefiting from the decline in India-based cryptocurrency exchange, CoinSwitch Kuber, which grew by nearly 4.5 million new users during the descent.

What caused Bitcoin to fall?

AND Spotlight Special There are several reasons for the recent drop in Bitcoin prices. Some of the main reasons are: Environmental sustainability: Tesla CEO Elon Musk, who until recently was a big supporter of Bitcoin, refused to accept Bitcoin as a payment method for Tesla, citing its high carbon footprint and the large amount of energy that the extraction process consumes. . Regulation in China: China’s brutal crackdown on crypto trading and mining has acted as a major catalyst for Bitcoin’s slide. It pulled the currency at its lower end by less than $ 30,000 for a brief period. Concerns over US regulation: The US Treasury’s announcement of tougher reforms against cryptocurrency tax evasion and the Fed’s hint of increased regulation in the space made Bitcoin shudder. However, the largest cryptocurrency has managed to rebound and has risen by over $ 35,000 in the past two days. Other cryptocurrencies like Ethereum, Dogecoin, etc., also experience a slight increase in value after a major crash.

Where is Bitcoin heading in the long run? The recent uncertainty lurking in the cryptocurrency market has been sparked by a series of unfortunate events such as Elon Musk’s tweets, China’s cryptocurrency ban, and more. However, it should be noted that Bitcoin managed to rise 600% in almost six months during the previous bull run. So while a 50% drop in value may seem very dramatic, we also have to consider that Bitcoin is still trading 300% higher than its value last year and 30% higher than at the start of 2021. Analysts predict that there are chances for Bitcoin’s value to fall further.

AND Spotlight Special Here’s what the bulls in the crypto market think about Bitcoin’s long-term perspective: Bitcoin Has Gotten Mainstream Now more than ever, Bitcoin has been widely adopted as a mainstream asset across the world. It is bought and sold by millions of people in different countries including India. Major retail players like Starbucks, Amazon, Expedia, etc., accept Bitcoin payments through third-party apps. Recently, El Salvador, a country in South America, announced that it will use Bitcoin as its official currency in the future. It is the first country to adopt Bitcoin for all payments. In addition, more than seven countries are in the process of making it their official currency. While India is far from accepting Bitcoin as legal tender, the RBI has stepped forward to clear the air around cryptocurrencies. It issued a new circular explicitly specifying that the old circular (regarding the previously imposed ban) is no longer valid as of March 2020. The RBI has suggested that banks continue their cryptocurrency transactions as they would under of the regulations in force. The influx of institutional investments Large institutions like MicroStrategy, Square Inc, Tesla etc. already hold a certain percentage of their assets in Bitcoin. Recently, Michael Saylor, CEO of MicroStrategy, announced the purchase of 13,005 bitcoins for $ 489 million in cash. The company now holds more than 1,05,000 bitcoins acquired at a total cost of $ 2.74 billion.

Additionally, institutions like Morgan Stanley and Goldman Sachs are planning to launch crypto funds for their clients.

Bitcoin is a hedge against rising inflation Some argue that the Bitcoin supply cap limit makes it a safe hedge against rising inflation in the global economy.

Should you buy the dip?

AND Spotlight SpecialThe market plunge is not a new phenomenon. The value of Bitcoin has seen many highs and lows over the past 12 years. Thus, investors should be prepared for price fluctuations before entering the crypto market.

Here are some questions to ask yourself before investing in Bitcoin

Are you investing the money you can afford to lose? – Due to the high volatility of Bitcoin, there are many opportunities to make good profits. At the same time, volatility could pose increased risk. Ask yourself if you can take the risk. It is easier to manage risk if you invest with the money you can live comfortably without. Make sure you are not withdrawing money from your emergency or retirement funds. However, investing even a small amount in Bitcoin has proven to be effective in building wealth. Are you here to make a quick buck? – Bitcoin is neither a get-rich-quick scheme, nor does it claim to make you rich overnight. Therefore, take your time to understand the motto and the logic behind it. Then decide if you’re comfortable keeping it for the long haul. For a new investor, it can be difficult to synchronize the market and buy the downside at the lowest price of currencies. To allow investors to get the most out of the market, platforms like CoinSwitch Kuber offer features like limit orders. However, if you have already done your research and are excited to invest / trade in Bitcoin then now might be a good time.

Disclaimer: The above content is not editorial and TIL hereby disclaims all warranties, express or implied, relating thereto. TIL does not necessarily guarantee, guarantee or endorse any of the above content, nor is it responsible for it in any way. The article does not constitute investment advice. Please take all necessary steps to ensure that the information and content provided is correct, up-to-date and verified.

[ad_2]