How To Prepare For Investing In Bitcoin ?
Following an unprecedented surge that lasted throughout most of 2017, bitcoin has become a very trendy investment commodity. For the first time, people really saw its potential in action, whereas for years we had only heard arguments about whether or not it could establish sustained value. And when bitcoin flirted with a $20,000 value in late November, a lot of people wanted to find a time to buy in.
As promising as bitcoin can be, however, it’s also been labeled one of the riskiest investments of 2018, on the grounds that it simply seems to be unpredictable. Even now, following a fairly significant crash from those late-2017 peaks, some believe bitcoin was a bubble that has burst and is now fading away slowly, and others think it’s going to surge to new highs. With the caveat that bitcoin is risky, however, it should still be acknowledged as a popular investment option – and strategy should still be discussed.
Should you be considering this risk – and we wouldn’t advise you one way or the other – these are some of the things you can do to prepare.
People have been trying to figure out what exactly influences bitcoin’s price for years now, and the answers are not immediately apparent. Because bitcoin is global, decentralized, and unbound by sweeping restrictions, it can evolve in different ways in different places. That said, some factors that influence the price have become clearer over time, and government regulations are at the top of the list. Government rulings that affect the trade of bitcoin can by extension affect the price immediately. As a hypothetical, imagine that the U.S. government suddenly made it illegal for Americans to deal in cryptocurrency. This would immediately remove a massive market, shrinking demand in a moment. Because of the possibility of scenarios like this, it’s important for anyone considering investment to study regulatory news closely.
Study The Exchanges
Even for those who learn the ins and outs of bitcoin, in terms of what it is, why it’s useful, and where its value comes from, can be a little bit puzzled by exchanges. There are a lot of them out there, and they handle bitcoin transactions in different ways – with different fees, different acceptable payment methods, and varying selections of additional cryptocurrencies that can be handled. It can all be somewhat confusing. However, it’s still worth keeping an eye on, because changes in exchanges can also impact the price simply by making bitcoin more accessible – or, in some cases, by increasing visibility for competitors. For instance, one positive effect would be if a major new exchange emerged for bitcoin, or an existing service like Square Cash started facilitating bitcoin purchases. A negative effect could come about, however, if an existing exchange with a broad user base like Coinbase announced that it would begin supporting a cheaper alternative to bitcoin.
Watch For New Uses
It’s only logical that the more bitcoin is accepted as payment, the more demand there will be for it. New uses can be difficult to track, however, and most of them are fairly small-scale. For instance, if a few new merchants in a small town, or even a small chain of stores starts accepting bitcoin, it’s probably not going to have much of an impact. However, there are some bigger instances of bitcoin acceptance that you should keep an eye out for. One example from the last year or so has been bitcoin’s emergence as a widely trusted payment method for online casinos, which do a great deal of business internationally. Following the rise of PayPal online casinos, platforms started looking for even more secure and/or anonymous means of accepting money, and a bitcoin-only casinos started to emerge. A major shift like this can give millions of people a new incentive to use bitcoin, so you should at least keep an eye out for these types of stories.
This is not advice you would see with regard to many other types of investments, but with bitcoin it seems appropriate. As stated, opinions and predictions surrounding bitcoin vary greatly. Some believe the bubble has burst and bitcoin will never reach its 2017 highs again; some see the first half of 2018 as nothing more than a lull, and believe the price will ultimately soar high above the $20,000 mark nearly attained last year. Even among successful financial experts, there tends to be a great deal of disagreement. It’s helpful to read expert opinions so that you can understand the reasoning behind them. But this is a rare case in which you might do well to ignore the actual predictions altogether, because there are simply too many of them moving in different directions.