4 Things You Should Know Before Investing in BitcoinPublished March 24, 2021 by Elana K
Bitcoin’s significant increase in value has prompted potential investors to consider it as a worthwhile investment. But before jumping on the Bitcoin bandwagon, there are a few things you should know.
The value of Bitcoin is on the rise, briefly surpassing the $60,000 mark for the first time earlier this month. The jump is huge — in September 2020, one bitcoin was worth about $10,000, which means the value has increased nearly six-fold in a year and a half. Bitcoin’s increase in value has prompted potential investors to consider it as a worthwhile investment.
According to Adam Traidman, CEO and co-founder of BRD, a popular crypto wallet, there are several things potential investors should keep in mind before jumping on the Bitcoin bandwagon.
Bitcoin is not for the faint of heart. It’s not a sure thing and it’s prone to ups and downs, especially when large institutional investors buy and sell. People who are considering investing in Bitcoin should know that it will be a bumpy ride. That doesn’t mean that it won’t pay off in the end, but the journey is not likely to be smooth.
Set Goals and Stick with Them
Due to the volatility of Bitcoin, it’s important to set goals and stick with them. It’s easy to get carried away if you see that the value has increased far beyond your goal, and you may be tempted to stick it out. Traidman warns not to get “greedy.” If your goal was to sell when the value hits 2x growth, then sell it. After that, you can reevaluate your next investment.
Make it a Long-Term Investment
Another factor that’s tied to the volatility of Bitcoin is the length of your investment. Someone who’s looking for a quick cash-in and cash-out situation will have a hard time because there are daily fluctuations. The better strategy would be to invest and “forget” about it for at least a year.
Use the Dollar-Cost Average Strategy
Many would-be Bitcoin investors try to wait to buy Bitcoin at the lowest price possible. When it gets low, they buy it, and then get upset if the value dips even lower. The dollar-cost average strategy suggests buying a little bit of Bitcoin every day, so the range of prices will be wider and the price you pay will average out.
Like any investment, there are pros and cons of investing in Bitcoin. As an investor, it’s important to weigh both sides and then decide what your next move should be. The pro tips above can also help you decide whether Bitcoin is the right investment for you.