You might be kicking yourself now if you didn’t get in on Bitcoin (BTC) when it first debuted in 2009. After all, it all started with practically nothing! Since then, the world of cryptocurrencies has exploded with countless trends and opportunities for early adopters to profit. However, Bitcoin did not reach $1 until February 2011 and gained significant traction. It rose to $10 before falling back to $5 at the end of the year. Those who had the foresight to invest in its early days, on the other hand, saw an incredible return on their investment.
Bitcoin’s current value is plummeting to just over $23,000, marking a decline of more than 28 percent in the past year. Interestingly, despite its positive trajectory since July 2022 and a significant surge of over 13 percent last month, investors are now pondering whether it’s wise to purchase Bitcoin during these downturns. One can only wonder… Should one buy the Bitcoin dips?
In the month of June, Bitcoin experienced a significant drop of almost 40 percent from its all-time high. This decline can be attributed to the effects of an overall bear market that also impacted equities. The drop was influenced by multiple factors, which would be challenging for beginner investors to understand. For this reason, before delving deep into the market, it’s better to start off with dollar cost averaging and receive help with cryptocurrency – in order to avoid significant losses.
Without further ado, let’s explore the question of entering the bear market and whether it’s a productive strategy.
Fear has swept the consumer market due to soaring inflation rates caused by government printing and distribution of money during the pandemic. Simultaneously, escalating fuel prices as a result of the Russia-Ukraine war have further aggravated inflationary pressures across the United States.
The Federal Reserve voted for a sequence of rapid rate hikes, resulting in increased borrowing costs for businesses. Consequently, bond yields rose and stock returns declined. While the stock market has been closely linked to cryptocurrencies recently, factors beyond just rising interest rates and inflation have influenced Bitcoin’s performance.
The crypto market experiences significant volatility, resulting in substantial fluctuations and the potential for both gains and losses. Many experts attribute the ongoing cryptocurrency crash to the impact of a stablecoin. The crash of TerraUSD has sent shock waves
throughout the crypto investment community, leading to a decrease in confidence regarding cryptocurrency as an investment option. Experts argue that this particular crypto winter differs from past crashes due to this factor alone.
According to a report from Cryptokoin.com, Celsius Network, a US crypto lending firm, recently froze withdrawals and transfers due to extreme market conditions. Following this development, the value of Bitcoin fell below $23,500. It is important to note that Celsius Network was not the only company affected by these circumstances in the crypto industry. Major exchange Coinbase also faced consequences by laying off 18 percent of its employees while other companies made the decision to freeze layoffs and hiring processes.
The current news is causing significant concerns among investors. Consequently, this has led to additional sales and further declines in the market. However, investors are aware that all markets go through ups and downs. The question now arises: Is this crypto winter any different? Can we expect Bitcoin to recover?
Looking at the stock market’s tumultuous past alongside cryptocurrency, it appears likely that investments will ultimately recover. By examining previous economic crashes and rebounds, including individual stocks and indices like the Nasdaq composite, one can observe a general upward trend in markets over time. This is particularly true for Bitcoin, which has experienced numerous boom-and-bust cycles in the past.
Naturally, the goal of any investor is to buy assets at a low price and sell them when they have reached their peak value. For instance, if one had invested in Bitcoin back in 2011 when it was around $10, they would be reaping significant profits today. However, those who entered the market during its peak or when it surpassed $50,000-$60,000 might currently find themselves slightly more anxious as they evaluate their portfolios. So, there are some crypto trading strategies to this.
Despite experiencing some recent growth, Bitcoin still has a long way to go before reaching its highest point. If you are aiming to make purchases at the lowest possible price, there is still time available to you. Keep in mind that attempting to perfectly time the market carries risk and can be challenging. Instead, consider developing an investment plan and utilizing a strategy known as dollar-cost averaging which can help minimize your vulnerability.
To effectively manage your investment in Bitcoin, consider dividing your total investment amount by time and purchasing at regular intervals during price drops. By doing so, you ensure that your investment strategy remains on track, even if the overall price continues to rise. It is worth noting that we may be approaching the end of the crypto winter period.
For instance, let’s say you purchase Bitcoin now at $20,000 and it eventually reaches its previous peaks. In such a scenario, you can expect a remarkable return on investment of over 300 percent. However, it is crucial to acknowledge that investing in cryptocurrency carries significant volatility. There are no guarantees of recovery or reaching previous highs. As a precautionary measure, only invest the amount that you can afford to lose.
While waiting for Bitcoin to rebound may cause stress and uncertainty, bear in mind that investing during a market downturn necessitates patience and the ability to keep long-term goals in focus—sometimes for years.
If you’re currently seeking a short-term investment, Bitcoin may not be the ideal choice. The uncertainty surrounding its potential drop below $20,000 leaves analysts divided on its future, despite recent gains. Uphold’s Head of blockchain and crypto research, Martin Hiesboeck, weighed in on the matter.
The market finds itself vulnerable and uneasy. However, it is not solely due to the emergence of more crypto projects but rather because of the challenging economic circumstances we currently face.
According to experts, Bitcoin is projected to reach $38,000 by fall 2023 and has the potential to even exceed $40,000 by year-end. In 2024, it may surpass its previous highs. While experts foresee a recovery for Bitcoin, it’s important to note that there is always an inherent risk involved.
If someone is interested in purchasing Bitcoin during a drop, now may present a favorable opportunity. Nevertheless, it is crucial to exercise caution and avoid overexposing one’s portfolio to cryptocurrencies. The current bear market and crypto winter offer potential benefits for investors with a high tolerance for risk. However, prudent investment decisions remain essential.
Considering an investment in cryptocurrencies? Bitcoin stands as the most reputable choice, known for its accessibility. However, exercise caution with new altcoin projects lacking
long-term staying power. For detailed market data and Bitcoin (BTC) prices, refer to this source.