Should I Invest In Bitcoin Now?

Bitcoin is a decentralised digital currency that is managed without any central authority, meaning there is no government, company or bank in charge. As such, it is more resistant to wild inflation and corrupt banks. Given its limited supply, Bitcoin is often seen as a good investment. However, is it too late to invest in Bitcoin? Some people believe that it is never too late to buy Bitcoin, and that it is a good investment in the long term. Others argue that it is too late to invest, as the price is already very high and the risk of losing money is significant.

Bitcoin's cyclical history and the start of a new bull market

Bitcoin's market cycle refers to the recurring pattern of price behaviour, characterised by alternating periods of appreciation and depreciation. This cycle is influenced by market sentiment, regulatory changes, technological developments, and the wider economy. Historically, Bitcoin has followed a four-year cycle tied to Bitcoin halving events, which happen approximately every four years. A halving event cuts the Bitcoin reward miners receive for mining new blocks by 50%, slowing the rate of increase in Bitcoin supply.

The last halving took place on April 19, 2024, and the next is expected in April 2028. Bitcoin's price history shows that its value has increased significantly in the past four years. In 2020, at the onset of the COVID-19 pandemic, Bitcoin's price rose from $7,161 at the start of the year to $28,993 by the end. In 2021, it surpassed $40,000 by January and reached an all-time high of $69,000 in November.

In 2022, Bitcoin's price began to gradually decline, falling under $30,000 in May and dropping below $20,000 by the end of the year. However, fortunes changed in 2023, with Bitcoin's price rising consistently throughout the year, starting at $16,530 and ending at $42,258. This upward trend continued into 2024, with Bitcoin breaching $60,000 again in February and March and setting a new all-time high of $75,830 on March 14.

As of July and August 2024, Bitcoin's price continues to appreciate rapidly, with some analysts predicting that the upcoming halving will trigger a bull run and a price rally in the broader crypto ecosystem. While there may be pullbacks and corrections along the way, the overall sentiment is positive for Bitcoin's price to continue rising in the near term.

Therefore, while it is impossible to predict the future, if Bitcoin follows its historical cyclical pattern, it may not be too late to invest, and there could be further price increases ahead. However, it is essential to remember that Bitcoin is a highly volatile asset, and investors should carefully consider their circumstances and goals before investing.

Bitcoin's finite nature and its effective store of value

Bitcoin is a decentralised peer-to-peer payment network that is powered by its users, with no central authority or middlemen. It is a form of cryptocurrency, which is a concept first described in 1998 by Wei Dai, suggesting a new form of money that uses cryptography to control its creation and transactions, rather than a central authority.

Bitcoin has a finite nature, with a cap of 21 million bitcoins that will ever be created. This restricted supply is one of the key attributes that enable its use in an economy. The finite nature of Bitcoin is a large part of its appeal, as it cannot be printed into infinity, unlike traditional currencies.

Bitcoin has proven itself to be a great way to grow wealth over time. With an annualised return of 230% over the last decade, it performed ten times better than the Nasdaq 100. However, it has also suffered from high volatility, with a 75% value drop from its peak in November 2021 to its bottom in November 2022.

Bitcoin has six key attributes that enable its use in an economy:

• Scarcity: Bitcoin has a restricted supply of 21 million, which increases demand.
• Divisibility: Bitcoin can be divided into up to eight decimal places, with units called satoshis.
• Acceptability: More people are becoming familiar with cryptocurrencies, and citizens of many countries are adopting them due to failing financial systems.
• Portability: Bitcoin can be used across borders, allowing any consumer with an internet connection to participate in the global economy.
• Durability: Bitcoin occupies a digital space, and can last as long as there is space for it.
• Uniformity: Bitcoins cannot be counterfeited and have no physical appearance.

Bitcoin is also resistant to wild inflation and corrupt banks, as it is not controlled by any government, company, or bank.

Bitcoin's long-term gains and its status as a long-term game

Bitcoin is a decentralised digital currency, free from the management of any central authority, such as a government, company or bank. It is treated as an asset by the IRS and is subject to capital gains taxes.

Bitcoin's value is determined by its market price on the day it is bought or sold. Its value can change rapidly, sometimes by the minute. This volatility makes it difficult to determine the fair value of the cryptocurrency on purchase and sale transactions.

Bitcoin's long-term gains are dependent on its performance over time. Its value has increased since its introduction in 2009, and it is predicted to continue to rise. One source states that "if bitcoin is going to fulfil its potential, then we are still insanely early".

Bitcoin is also scarce and limited, whereas fiat currency is unlimited and will be printed into infinity. This means that in the long term, Bitcoin is likely to increase in value compared to fiat currency.

However, it is important to note that the performance of Bitcoin is unpredictable, and it is a risky investment. One source states that "no one has a clue what the price is going to do in the short term".

To benefit from long-term gains, investors are advised to hold onto their Bitcoin for as long as possible. One source recommends holding for at least three years, while another suggests waiting five years or more.

Overall, Bitcoin is a volatile and unpredictable investment, but its potential for long-term gains is promising.

Bitcoin's adoption and its impact on demand

Bitcoin is a decentralised digital currency that is issued and managed without any central authority. There is no government, company, or bank in charge of Bitcoin, making it resistant to wild inflation and corrupt banks. As of 2024, cryptocurrency markets have enjoyed a healthy recovery following a tumultuous 2022 bear market. The price of Bitcoin has been relatively stable compared to the past, and crypto ownership rates have increased to record levels.

The anticipated Bitcoin ETF could drive further adoption among those who have not yet invested in cryptocurrency. As of 2024, 40% of American adults now own crypto, up from 30% in 2023. This is a significant increase and indicates that cryptocurrency is becoming more widely accepted and utilised. Among current crypto owners, 63% hope to obtain more cryptocurrency over the next year, with Bitcoin being the most desired currency.

The rate of crypto ownership by women has also surged from 18% in 2023 to 29% in 2024. This rise could be due to the increasing visibility of women covering blockchain developments in the news and investing in cryptocurrency and blockchain companies. Additionally, 46% of Americans think that Bitcoin ETF approvals in 2024 will positively impact the blockchain industry.

Lower middle-income (LMI) countries, such as India, Vietnam, and Nigeria, have seen a stronger recovery in grassroots crypto adoption compared to more developed countries. LMI countries account for 40% of the world's population, and their dynamic and growing industries and populations could drive the future of crypto adoption.

While there are risks associated with investing in cryptocurrencies, such as price volatility and the lack of government protection, it is clear that the adoption of Bitcoin and other cryptocurrencies is on the rise. The increasing demand for and acceptance of crypto could lead to further mainstream adoption and regulatory changes in the future.

Bitcoin's resistance to inflation and its advantages over traditional currencies

Bitcoin is often seen as a hedge against inflation, as it has a fixed supply of 21 million coins, unlike fiat currencies, where central banks can print more money at any time. This restricted upper limit gives Bitcoin an advantage over traditional currencies in terms of inflation resistance.

Bitcoin's decentralised nature means it is not controlled by any single entity, such as a government or central bank, and it is not backed by any specific economy or currency. This gives Bitcoin its unique resilience and enables it to operate independently of any country or regulatory body. It also means that no one can influence your money and transactions, and there is no risk of government manipulation or mismanagement of the currency.

Bitcoin's finite supply ensures scarcity, which can drive up its value over time. This is in contrast to traditional currencies, where governments can intentionally devalue their currency, leading to inflation and a decrease in purchasing power. Bitcoin's supply will steadily increase until it reaches its cap of 21 million coins, projected to happen in 2140. After this, it will become disinflationary, with a constant monetary base and an unchanging supply.

Another advantage of Bitcoin is its low transaction fees. Bitcoin transactions tend to have lower fees compared to traditional payment methods that involve intermediaries such as banks. Bitcoin transactions are also typically faster and can be completed within minutes, regardless of the distance between the sender and recipient.

Additionally, Bitcoin is highly portable, more so than gold, and can be sent and received by anyone with an internet connection worldwide. This makes it easily transferable and accessible, even in countries with limited banking infrastructure or unstable financial systems.

While Bitcoin has advantages over traditional currencies in terms of inflation resistance and transaction speed and cost, it also has disadvantages, including the potential for fraud and theft due to the irreversible nature of transactions. The volatility of Bitcoin's value also makes it a risky investment compared to traditional currencies.

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