Bitcoin is a digital currency that has gained significant popularity over the past decade and has almost become synonymous with cryptocurrency. It is often seen as a good store of value and remains one of the most valuable cryptocurrencies in the market.
Since its introduction in 2009, Bitcoin’s price has been a hair-raising rollercoaster. During its introductory stage, Bitcoin's price leaped to $0.09 in July 2010. After some alternating highs and lows, the next significant price movement for Bitcoin was in 2017, when the price of a Bitcoin reached just below the $20,000 mark for the first time. This was followed by a crash in December 2017, which sent the price dipping briefly below$11,000.
Like everything else, the pandemic of 2020 didn't spare Bitcoin, and the BTC price fell below $7,000in March. Then, making a stirring comeback, Bitcoin's value jumped to an all-time high of $68,789 in November 2021. However, the 2022 crash set in motion by Luna’s downfall and further devastated by FTX’s solvency created a dip in Bitcoin’s price once again. Its price steadily declined, bottoming out at around $16,604 in December 2022.
Despite the wild ride, many investors in the crypto market remain interested in Bitcoin investments. Some may have wondered what would have happened if they had invested $100 in a single Bitcoin at different points in its history.
In this article, we will explore the outcome of such an investment and discuss whether or not 2023 is still a good time to invest in Bitcoin.
Who Invested in Bitcoin During the Crypto Winter?
As an aftermath of a series of scandals rocked the crypto market in 2022, the industry languished in a drawn-out "crypto winter" — a period marked by dominant bearish sentiments. Despite this, some notable institutions still invest in Bitcoin today.
According to a 2022 survey by Coinbase, 62% of institutional investors reported increasing their cryptocurrency holdings. For example, MicroStrategy, a publicly traded business intelligence company, snapped up $10m worth of Bitcoin in June 2022 and another $45m in the last quarter. The company made headlines when it announced that it had invested $250 million in Bitcoin in 2020, making it the first large corporation to hold Bitcoin as a cash reserve asset.
What Happens if You Invested $100 in Bitcoin in 2022?
The value of Bitcoin in 2022 saw significant fluctuations, with its all-time high (ATH) reaching $47,445 in March and dropping to its all-time low (ATL) of $16,441 by December. If an investor had decided to dollar-cost average (DCA) their portfolio by purchasing a fixed amount of Bitcoin at monthly intervals throughout the year, the value of their investment would have varied significantly depending on when they made their purchases.
Luckily, there are online tools that you can use to backtest this strategy based on historical performance. For example, an investor who purchased $100 worth of Bitcoin every month throughout 2022 would have invested a total of $1,200 and ended up with Bitcoin worth $1,187 today.
While this result may not be remarkable, remember that Bitcoin fell as low as $16,441, which would have eroded a considerable chunk of the investor's profit had they not used the DCA strategy. Also, the DCA investment strategy is better suited for time horizons longer than one year.
Is Investing $100 in Bitcoin Sufficient to Profit in the Long-term?
It is difficult to predict with certainty whether or not investing $100 in Bitcoin will yield a profit in the long term. Bitcoin has proven notoriously volatile and is not guaranteed to increase in value over time. Potential investors must be aware of the risks associated with investing in Bitcoin and approach it cautiously.
However, using a dollar-cost-averaging investing strategy potentially allows investors to profit from their Bitcoin investment over the long term.
Is 2023 the Right Time to Invest in Bitcoin?
Whether Bitcoin's price skyrockets is subject to the macro and micro factors in the economy, like market demand and supply, regulatory developments, hype, investor sentiments, and technological advances. It is impossible to predict whether 2023 will be a great year for crypto investments. But some analysts foresee value growth, mainly from the expected deflationary effect of the next Bitcoin halving, which will occur in 2024. Bitcoin halving is a process that slashes the reward for mining a block of Bitcoin in half to control the supply and keep inflation in check. It occurs every four years.
But not all industry watchers are bullish about Bitcoin. Some predict it may fall as low as $10,000 due to rising energy prices and a possible spike in inflation rates. Inflation applies pressure on the market as investors and institutions sell off their assets.
Regardless, Bitcoin is still a speculative investment. While there are Bitcoin evangelists who strongly believe in the potential of Bitcoin, there are also people who are skeptical of or opposed to Bitcoin and its adoption. Diversifying your investment assets may not be a bad idea if you have excess cash reserves in your bank account overall.
Will Bitcoin's Price Stabilize?
Many factors can influence the price of Bitcoin, as mentioned before. Still, some experts believe that as Bitcoin becomes more widely adopted and its infrastructure improves to fit the criteria of the users, the price of Bitcoin to stabilize is not impossible. Here are some ways that the price of Bitcoin would contribute to price stabilization over time:
Increased adoption and use: When Bitcoin becomes a mainstream currency, which means a higher demand for the asset to be used as a medium for transactions.
Improved market infrastructure: A more robust and efficient market infrastructure, such as cryptocurrency exchanges and payment systems for users to on-ramp and off-ramp Bitcoin, can help to reduce price volatility.
Increased regulation: Government regulations can provide greater clarity and stability to markets and help reduce price volatility.
Increased market liquidity: An increase in the number of buyers and sellers participating in the market can increase liquidity, which can help to stabilize prices.
Economic and market conditions: Stabilization of economic and market conditions can also contribute to price stability, reducing uncertainty and risk for investors.
Tips to Invest in Bitcoin
If you are considering investing in Bitcoin in 2023, there are a few things you should keep in mind to help increase the return on your initial investment.
Tips for Choosing a Reliable Crypto Exchange
One of the most important things to consider when investing in Bitcoin is choosing a reliable crypto exchange. This becomes even more pertinent following the disastrous collapse of Mt Gox and, more recently, FTX. Devastated investors saw their life savings vanish overnight as over 800,000 Bitcoins were stolen from the Mt Gox exchange in the infamous 2014 hack.
FTX, another major exchange, collapsed in November 2022 after Coindesk reported alleged malpractices, raising doubts over the exchange's solvency. These catastrophic incidents highlight the importance of choosing the right place to invest and store your Bitcoins.
Choosing a reputable exchange involves looking for one with an associated physical address, offers Fort Knox-level security, and complies with relevant regulations.
Always research extensively and read other users' reviews before choosing an exchange to partner with.
The Transaction Fees
Another critical factor to consider when selecting an exchange for your Bitcoin investment is the transaction fees. These fees can vary significantly from one exchange to another and could be based on transaction size or activity level. Transaction fees add up with time and significantly impact your investment profitability. So it is essential to compare the fees charged by different exchanges and their fee structure before deciding.
Technical Analysis Chart:
Author think that next expected moves of #bitcoin
Should You Invest in Bitcoin in a CEX or DEX?
A centralized exchange (CEX) is a type of cryptocurrency exchange that operates with a central authority. It allows users to trade cryptocurrencies within the exchange, which acts as an intermediary between buyers and sellers. On the other hand, a decentralized exchange (DEX) operates without a central authority. It allows users to trade cryptocurrencies directly with each other, securely and trustlessly.
There are pros and cons to CEXs and DEXes.
Centralized Exchange (CEX)
Pros:
Most CEXs are regulated, which can provide a higher level of security for users.
They often have more advanced trading features and tools, such as margin trading and stop-loss orders.
They can be easier to use, especially for beginners.
Provide reliable customer support to answer any inquiries you may have.
Cons:
Because CEXs are centralized, they can be vulnerable to hacks.
Users do not have complete control over their assets, as the exchange stores them.
CEXs may charge higher fees than DEXs.
Decentralized Exchange (DEX)
Pros:
DEXs are decentralized, meaning a single entity does not control them. This makes them more secure, as there is no central point of failure.
Users have complete control over their assets, as they are stored in a cryptocurrency wallet they control.
DEXs may have lower fees than CEXs.
Cons:
DEXs may have limited trading options and tools compared to CEXs.
They can be more complex to use, especially for beginners.
Some DEXs may not be as well-regulated as CEXs, which can increase the risk of fraud or hacks.
Ultimately, deciding whether to use a CEX or DEX depends on your individual needs and goals. If you are a beginner or are looking for a more user-friendly platform with advanced trading features, a CEX might be a good choice. A DEX might be a better option if you value control over your assets and privacy and are willing to trade off some convenience and features.
How to Store Your Bitcoin
You must safely and securely store your Bitcoin once you have purchased it. Proper storage will protect your investment and give you peace of mind. Each option has pros and cons, so you must consider the tradeoff between security and convenience before carefully deciding which option is best for you.
Here are several ways to store Bitcoin:
Bitcoin/Crypto exchanges: Many crypto exchanges offer services to store Bitcoin on the platform. While convenient, exchanges can be vulnerable to hacking.
Bitcoin wallets: As a software program, these wallets help to store your Bitcoin and allow you to send and receive Bitcoin transactions. These include desktop wallets, mobile wallets, and web wallets.
Hardware wallets: They are physical device that stores your Bitcoin offline. They boast about the security that non-other wallet type offers, making it more difficult for hackers to access an investor's Bitcoin.
Paper wallets: They are printouts of your public and private keys, which can be used to store Bitcoin offline. Always keep your paper wallets in a secure location, as they can be easily lost or stolen.
Regardless of which storage option you choose, it is important to keep your Bitcoin secure and make sure to follow best practices for storing and protecting your Bitcoin.
How to Buy Bitcoin on Binance
If you have spare cash in your bank account, consider investing in Bitcoin to diversify your portfolio. Here's how you get started with #Binance
Binance offers an intuitive interface that allows users to buy and sell Bitcoin and other digital assets via their local fiat currencies. Follow these simple steps to buy Bitcoin on Binance:
Register for an account on Binance or log in to your existing account.
Go to the menu and click on the Buy Crypto button.
From the drop-down menu, select Express.
Enter the amount of BTC you want to purchase in your preferred fiat currency.
Select your preferred funding method. Note that some options may not be available based on your location.
Proceed with payment.
Verify your account through the KYC process to complete the purchase.
