Key facts:
Bitcoin falls to $36,000, down 47% from its all-time high of $67,800.
The growing adoption of bitcoin suggests that its price will increase in the long term.
With the price of bitcoin (BTC) falling, the big question is: “should I buy bitcoin now?”. Right now the cryptocurrency is trading at $36,000. A value that implies a drop of 25% from the maximum it reached in 2022 at USD 48,000 and a depreciation of 47% from its highest historical peak in November of last year at USD 67,800.
In communication with CriptoNoticias, the bitcoin trader, Eduardo Gavotti, comments that the question Is it a good time to buy bitcoin or is it already too late?« It raises a thought that tends towards the extremes. “And the extremes are not usually the most convenient”, warns. However, it turns out to be a mystery that many are made to benefit from the performance of the cryptocurrency.
To answer this question, the specialist explains that it all depends on what the reason for purchase is. “If your objective is short-term speculation, it may not be the best time because the environment and sentiment is quite bearish. But if your goal is a long-term investment, the current price is perhaps of less importance, regardless of when you look at it»he expressed.
Currently the cryptocurrency, like the markets in general, are being hit by the unfavorable global economic context. The price of bitcoin has behaved similarly to stocks since the start of Russia’s war against Ukraine. This, in turn, is that the United States and Europe register historical inflation records and China deploys strong confinements due to covid-19. A series of issues that shake the world economy and, therefore, generate expectations about the price of BTC.
The price volatility that bitcoin has makes it work as a risky asset. Something that some investors prefer to avoid in times of economic uncertainty like the one we are experiencing now. This is due to the falls in value that it may have in the short term. However, the analysts believe that in the long term the cryptocurrency can increase its value drastically due to the growing adoption it is having in the world.
Bitcoin price will rise drastically in the long term if its adoption increases
“If the asset is good, time is its best friend in the long run”Gavotti says. This is the thinking that governs large companies, such as Tesla and MicroStrategy, which have decided store your reserves in bitcoin. Largely because they believe their value will grow over time.
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Currently, the number of high-net-worth traders and bitcoin holders (investors who store the cryptocurrency long-term) are at an all-time high. There are precisely more than 836,000 wallets with more than 1 BTC, according to the data collected by Glassnode. A historical record that indicates that there are many players in the market with great investment who trust that its price will continue to increase.
Without going any further, the growing number of companies that offer services to invest in bitcoin shows how much the adoption of this asset has increased. Even traditional entities such as investment funds listed on the stock exchange and banks have decided to enter the world of cryptocurrencies, which means that their clients are interested in investing in this market and have a high demand for such services.
An example of this is LGT Bank in Europe and the attempt of the Galicia Bank in Argentina for allowing its customers to buy bitcoin. An initiative that indicates that traditional finance companies do not want to be left out of this wave that shows signs of continuing to grow. As well as the governments that have implemented regulations to collect taxes on cryptocurrencies.
Brian Estes, the CEO of the investment fund Off The Chain Capital, said: “As companies and banks get involved and become critical mass, the level of activity per user (in bitcoin) will really start to reflect traditional financial services. Considering this, he estimates that a BTC could be worth a million dollars by the year 2024.
Asset management company ARK Investment Management projects the same figure, but a little later. From his perspective, bitcoin price could exceed one million dollars in 2030. Following this line, for this year, bullish analysts believe that it will reach USD 100,000. However, there is no guarantee that this will happen. Others perceive that the economic environment will continue to hit it hard and it will fall to USD 30,000, so it is important to exercise caution if you decide to buy.
Bitcoin works as a risk investment
“In general, many people focus too much on the price and not enough on the size of the investment or outlay they are going to make. The problem then is in considering the scenarios as an “all or nothing” when they can invest in a staggered manner, just as is done with a retirement/retirement plan»Gavotti says.
The panorama shows that the adoption of bitcoin will continue to grow in the world, which would increase its price and generate profits for traders who buy it.. Despite this, no one has a crystal ball to know what will happen in the future, so it is vital to know that any projection is limited.
Due to its high price volatility, it is important to consider that it works as a risky investment. Therefore, it is convenient not to put all the eggs in the same basket. That is, not depositing 100% of the savings in BTC. One piece of advice investors often give is: “Don’t invest more than you would be willing to lose.”
Experienced investors recommend having a diversified investment portfolio, including bitcoin as well as other assets.. As for savings, “it is always pertinent to place them in instruments that allow that capital to be revalued,” says Gavotti. And he clarifies: “Bitcoin is one of those instruments, but not the only one.”
Bitcoin is expected to be the universal currency, which would increase its value.
Something that bitcoin has is that in reality in its essence it is not an investment, but a currency, such as the dollar, the euro or that of any country. It serves as money to pay for goods and services. Its growing adoption has made its value increase by leaps and bounds, going from zero to USD 67,800 in almost thirteen years since its origin in 2009.
Such an increase in value and the projection that it will become a universal currency alternative to the dollar is what makes it also be used as an investment.. If your demand increases, your price will go up. That’s why traders have added it to their portfolio, either to store it for the long term or to sell it when it makes small rallies and buy it back on dips.
The accountant Federico Ruffino commented to CriptoNoticias that, in the face of speculation, traders are with cryptocurrency before traditional investments. This is mainly because it is much more dynamic and easy to access, he explained. Above all, for people from countries with economic difficulties and restrictions.
Bitcoin is currently the ninth asset with the largest market capitalization, holding more than USD 721 billionaccording to the ranking of MarketCap. A position that exceeds the valuation of large companies such as Visa or Meta, the owner of Facebook, Instagram and WhatsApp.
This level of money circulating in bitcoin, as well as its adoption in businesses and the community, suggests that its use will continue to grow. A situation that would cause its price to rise, so the present seems like a good time to buy bitcoin in that case and make long-term gains.
Even more so considering that it is now trading 45% below the historical maximum it reached six months ago. However, there is no guarantee that it will go much higher or lower, like any risky investment, so proceed with caution.