As Bitcoin Surges, When’s the Right Time to Get Involved?
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Cryptocurrency is a market that offers extreme volatility, which means that although there’s a huge risk, there’s also the potential for significant gain. Moving away from a centralized currency is gaining increasing popularity and cryptocurrency is gradually making its way into the mainstream.
This is particularly the case with arguably the best-known of them all: bitcoin. Created in 2009, it’s experienced its fair share of bumps in the road but is now viewed as a viable option to traditional payments.
The price of bitcoin recently reached an all-time high - so does this mean it’s good or bad to get involved now? Here’s a closer look at what you need to know.
Bitcoin is exposed to world events because the price fluctuates with supply and demand. Unlike fiat currency, there’s a finite amount of bitcoin that can be mined, and this makes it particularly sensitive to appetite.
A big sell-off in April saw the price of bitcoin plunging to $3867, with around half of its value wiped off in a single day of trading. Although there are safeguards in place to stop large stakeholders from selling everything they have, if there's a contagion in the market, the effect can be disastrous.
However, by December, the price of bitcoin had achieved a record high, breaking through previous support levels to reach the top value of $23,770.
An Easier Way to Invest in Bitcoin
Although there is significant optimism about the future of bitcoin, it’s not the easiest type of investment. You’ll need to be able to securely store and acquire cryptocurrency, downloading a wallet for this purpose.
If you don’t want the extra work involved in owning bitcoin, you can still take advantage of the potential in the cryptocurrency market. Opting for CFDs instead means you can capitalize on the gains without the hassle of actual ownership. Bitcoin CFDs have never been more popular but how do you trade crypto CFDs? As a type of contract between you and the brokerage, you won’t be purchasing any actual bitcoin but speculating on the price movement instead.
CFDs can also offer opportunities even when the bitcoin value is about to drop, unlike ownership of the cryptocurrency. This is because you can open up both long and short positions, enabling you to predict market movement.
Is It Too Late to Get Involved in Bitcoin?
Bitcoin investors who bought when the cryptocurrency was riding high were stuck with lots of bitcoin that they couldn't sell off without incurring heavy losses. There is a concern that anyone investing in bitcoin now could experience the same problem. The chances are that bitcoin will surge again in the future, but you may have to wait several years for it to do so.
Does that mean you shouldn’t buy it? Not necessarily. If you’re willing to play the long game and ride out any turbulence bitcoin could still represent a healthy investment, even at its current high price, but there is always a risk of losing your money. There will be increasing opportunities for cryptocurrency in the coming years, and analysts believe this will create demand - and a subsequent rise - in the value of bitcoin, but of course, there is no guarantee. Do your own research.
If all of this sounds too risky, CFDs present a far simpler solution. You can take advantage of a falling crypto market, or set up short-term investments. And without the inconvenience of everything that bitcoin ownership brings, it’s a preferable option for many.