Before jumping on to the bitcoins though, ask yourself this: is this the right time to buy Bitcoins?
Want to invest in bitcoins? That’s a great idea. Bitcoin is the millennial’s new obsession. In spite of the complications in investing, most people are either already investing, or thinking of investing in Bitcoins.
Bitcoins are valued by investors because of the store of the value function. It works as a payment system and has decreasing inflation. The main concern with Bitcoins however is the lack of security and privacy. There have been instances where $40 million dollars worth of Bitcoins have been hacked and stolen. And yet, people are investing in Bitcoins.
The reason is this: if you had invested a hundred dollars in Bitcoin when it first launched, then your worth is over millions of dollars. The key to getting good returns on Bitcoins is to understand markets and trends. If you find yourself asking what is cryptocurrency, and when is the right time to buy Bitcoins, then this article is for you.
Table of Content
- Do your research befor investing in bitcoins
- What kind of a Bitcoin trader are you?
- Underestand market and trends
What is cryptocurrency?
Cryptocurrency simply means a form of virtual currency. The name is derived from cryptography, or the complex encryptions which secure this digital currency. Digital currencies usually have the disadvantage of double-spending as it is easy to reproduce. However, this problem is resolved with cryptocurrency which is why it is so popular today.
Bitcoin is a cryptocurrency that was introduced in 2008.
To invest in Bitcoin, you need to choose an exchange, proper documentation, storage, and a wallet. Some people do buy bitcoins credit card, as per their convenience.
To make the process simpler for you, here are some tips for choosing the right time to buy Bitcoins:
Do your research before investing in Bitcoins
Bitcoins cannot be bought on a whim, unless you have some money to lose. So, research before investing in Bitcoins is key to making good returns. Like any other asset trading, Bitcoins have their own complications.
If you’re informed about Bitcoins, you will be able to save yourself a lot of stress. Often, people who invest without complete knowledge find themselves panicking. Bitcoins involve a lot of money. You cannot afford to lose your wealth in Bitcoins when it could have been avoided.
There are a lot of apps today that explain how to invest in Bitcoins. You will also find several resources online. It is important to note that resources need to be accurate. There are several resources that give false or inaccurate data about Bitcoin. Trust a credible source for Bitcoins, and check multiple sources.
Bitcoins might be complicated, but it’s not rocket science. All you need is a little bit of patience to understand the game.
What kind of a Bitcoin trader are you?
Before trying to invest, you must know what kind of Bitcoin trader you are. For instance, you may want to do buying and holding. If you are a long-term investor, you know what HODL is. This is an investment strategy in which the investor invests for a long-term period. This might have high risks, but this strategy also gives good returns.
A quick tip: for buying and holding Bitcoin, keep aside a specific amount. This amount is something that you can afford to lose during a market drop.
Or, you might buy on the dip. Bitcoins are a volatile market. It doesn’t take long for the graph to plummet. Therefore, as a trader, you can always buy the dip. This means that every time the Bitcoins market falls, you will be buying some. It sounds counterproductive to do so but it’s a simple economic theory. After every dip in the market, there is always a boom.
Understand Market and Trends
Take a cue from the best investors in the world. Warren Buffett, Bill Gates: they read several books before their investment journey. Bitcoin is no different. You need to understand the performance of Bitcoin. For instance, you can study the history of the Bitcoin and cryptocurrency market. Talk to Bitcoin experts. This is how you will learn to have foresight about the Bitcoin market.
The Right Time to Buy Bitcoins
Several Ivy League professors have curated theories on the Bitcoin market. For instance, Aleh Tsyvinski and Yukun Liu studied the price of Bitcoin for seven years. There are two times when buying Bitcoins is recommended:
- Salary days of corporate employees. Most experienced traders refrain from buying Bitcoins these days. Why? Well, more people get salaries. That means more people have the power to buy Bitcoins. When this happens, there is an increase in demand. Thus, the price of Bitcoins shoots high.
- Some people believe that demand for Bitcoins reduces towards the weekends – it is high on Fridays and Saturdays. Most traders, therefore, buy it just before Mondays when the demand is lower.
Thus, the right time to buy bitcoins is usually when the price is low. However, you can always experiment with investment strategies. So go get yourself a digital wallet or buy a bitcoins credit card. There is no time like now to get started on Bitcoins.