Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Worried About Bitcoin? Here’s Why I’m Not!
Ruby Layram
13th Aug 2024
It’s been a bit of a rollercoaster for Bitcoin investors over the past week. The crypto dropped to $49k on the 5th of August, after reaching $69k only one week before. This is very volatile – even for Bitcoin!
The cryptocurrency has been able to regain some of it’s losses since then and now trades at around $58k. However, this is still a significant drop from its previous high.
Unsurprisingly, Bitcoin’s recent performance has caused a lot of worry among investors. Especially those who aren’t used to the volatility of cryptocurrency!
And I don’t blame them, it can be incredibly disheartening to see your portfolio plummet overnight. However, this isn’t the first time that Bitcoin has left us on the edge of our seats and I don’t think the coin’s recent performance is any reason to sell.
Here’s why I’m holding on, instead of heading for the exit!
- Bitcoin’s history of growth
- Will Bitcoin still reach $100k?
- How to minimize risk when investing in Bitcoin
Bitcoin’s history of growth
For new crypto investors Bitcoin’s recent price fluctuation may have been surprising. However, seasoned investors know that Bitcoin (and all cryptos) have a reputation for being volatile!
This is not the first time that the price of Bitcoin has plummeted, only to see exceptional gains further down the line. Let’s not forget that Bitcoin started out at a price of just $1 back in 2009.
Of course, there is no guarantee that history will repeat itself. However, it seems like Bitcoin is already attempting a comeback and market conditions are promising.
Adoption is at its highest
Bitcoin has managed to see growth, even when only a tiny fraction of the population participated in cryptocurrency.
Fast forward to 2024, the rate of adoption is higher than ever. By the end of 2021, nearly 300 million people around the world owned some kind of cryptocurrency, and this number is probably even higher now!
Furthermore, Bitcoin has become more mainstream and is now accepted as payment by a variety of businesses. Not to mention the recent approval of Bitcoin spot ETFs which have made it possible to gain exposure to Bitcoin through the stock market.
Also see: 3 ways to invest in Bitcoin without buying Bitcoin
If Bitcoin could grow from $1 to $60,000 when adoption was lower than it is now, I don’t see any reason why the crypto can’t repeat this performance!
Higher adoption means higher demand, which is a key factor in the price of an asset.
Support for Bitcoin is growing
Alongside the increasing adoption of cryptocurrency, support for Bitcoin is notably on the up.
This is partly thanks to Mr Trump, who has made crypto a big part of his presidential campaign. Trump’s loud support for cryptocurrency caused the price of Bitcoin to rally last month and many investors believe that a Trump win could see the price of Bitcoin shoot up even further.
Of course, there’s no knowing whether Trump will win the upcoming election. But it seems likely after the recent assassination attempt!
The recent Bitcoin halving
Another reason that I believe conditions are pretty strong for Bitcoin right now is that the coin recently underwent a halving event.
The recent Bitcoin halving reduced the rate at which new Bitcoins can be created by half. Over time, this will gradually reduce the supply of Bitcoin in circulation and put deflationary pressure on the price.
I believe that we are yet to feel the full effects of the halving, which occurred in April 2024. It takes approximately 6 months for halving to affect the price of the coin.
Will Bitcoin still reach $100k?
The question on everyone’s mind right now is whether or not Bitcoin still has the potential to reach $100k.
I say yes!
In terms of global adoption and real-world use cases, the crypto market is still in its early days. As more companies harness the potential of crypto and more people start using it as an investment or payment method, the demand for cryptocurrencies will naturally increase.
Although there are thousands of cryptos out there, Bitcoin stands as the most popular option among both investors and institutions. This means that it will benefit from future adoption and developments.
It’s difficult to pinpoint exactly when Bitcoin will hit the $100k mark. But I still think it’s within reach.
How to minimize risk when investing in Bitcoin
Even though I still believe in Bitcoin’s potential, there is no denying that it’s a risky investment!
Luckily, there are steps you can take to reduce the risk of investing.
Diversify!
If you’ve been a MoneyMagpie reader for some time, you will know that we love to diversify.
Diversifying involves investing in a basket of different assets rather than putting all of your money behind one thing.
So, you could invest in Bitcoin, Ethereum and maybe something like Solana! Check out the 5 cryptos I would have in my portfolio for inspiration.
Use Dollar Cost Averaging (DCA)
It is virtually impossible to time the crypto market. So, instead of investing all of your funds at once, consider spreading your investment across the year using Dollar Cost Averaging.
This is a popular investing strategy that involves investing little and often. Rather than trying to time the market, you invest at regular intervals no matter what.
By doing this, you increase your chances of investing during undervalued periods. The easiest way to implement a DCA strategy is to use an automated investing app that invests for you at predetermined intervals.
Despite the recent market volatility, I still think its worth having a bit of Bitcoin in your portfolio!
However, nothing in this article should be taken as investment advice. Cryptocurrency is a volatile asset that is best suited to high-risk investors.
Remember to always do your own research before putting any money away! You should consider your financial situation and speak with a financial advisor to understand what type of strategy might work best for you.
Are you interested in learning more about investing? Why not sign up to the MoneyMagpie bi-weekly Investing Newsletter? It’s free and you can unsubscribe at any time if you find it isn’t for you.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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