Bitcoin is considered the prominent crypto currency by the market cap, although it is considered a risky investment due to its high volatility.
Everyone is aware that there are numerous benefits to investing in the crypto market.
However, you should consider investing in it if you have a greater tolerance towards risks and are in a strong financial position to start losing any funds you have invested.
If you plan to invest in this crypto coin in 2024, you must maintain a diversified portfolio, including varied investments, to reduce risk exposure.
As a general rule, you should not invest more than 10% of your profile into riskier assets such as Bitcoin.
What Type Of Investment Is Included In Bitcoin?
Since its existence for more than a decade, there is still an ongoing debate about the type of investment involved in Bitcoin.
Possessing Bitcoin is not like owning a company stock, and Bitcoin does not generate revenue by selling the services or the products, unlike any other business.
It does not impose dividends of any type, and nor do they have a board of directors, CEO, or any other form of a centralized group setting goals or who are held accountable.
The Securities and the Exchange Commission Chair mentioned in June 2022 that a few cryptos have the prime attributes of the securities while the rest are commodities.
These commodities are linked with raw materials such as grain, metal, and milk.
The commodity markets get regulated through the Commodity Futures Trading Commission, which is even responsible for regulating the trading of foreign currencies and is one the highly active government agencies under the regulation of the cryptos.
Others would mention that it is a currency you can use for making payments for services and goods.
However, businesses are accepting Bitcoin as being far from a massively stretched practice.
Bitcoin Acts As Storage For Values.
Although Bitcoin has entered this market as an alternative digital currency, it has turned out to be an investment asset.
But, this development went up from its intrinsic values under their limited supply, making it the ideal value store.
Keep in mind that one of the prime challenges for fiat money is that central bodies like the government can increase the supply of money at their will with the effect of this at the highest supply of funds relative to their demands.
This reduction in the money’s value is due to the increased supply of money, which is also considered inflation.
Bitcoin Is Considered Digital Gold.
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Since Bitcoin is great storage for values, investors and analysts who have compared it to gold dub their digital gold.
Gold is derived from their main investment values through using them as the hedge against their inflations.
It is tough to increase the gold supplies, unlike fiat money, which is just like printing out a bunch of paper backed by the government with great storage of values.
Investors and analysts are relying on Bitcoin as the storage of values that offer a hedge against this type of inflation offered by gold.
Volatility & Bitcoin
The exponential growth of Bitcoin and its ability to maintain this type of title for the highly valued crypto are masking the fact that its ascent is never straight.
The main side of purchasing Bitcoin for just a dime less than in 2010 is transparent. However, with this volatility, that is a major downside.
One in 2013 in Bitcoin would have witnessed their investment start tumbling 80% and would never stand above the water for the next three years.
The 2018 decline stretched throughout the year and dropped to 50% or more during 2021 and even in 2022.
Anyone who has just started out investing in Bitcoin aims for the best. However, they should stand prepared for major downturns.
Although Bitcoin started recovering several times, there is a greater possibility that it would stand at zero, for instance, if numerous platforms fail and there is a major selling-off matter.
Conclusion
Whether you are a seasoned investor or new to the world of cryptocurrency, it is important to stay informed and make decisions based on careful research and analysis.
With a clear understanding of the risks and opportunities involved, you can navigate the cryptocurrency market with confidence and potentially earn significant returns on your investment.
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