Bitcoin’s position on the crypto market has significantly strengthened in recent months. Although there are still very different opinions around him, most experts and analysts are positive, some expect BTC to rise to $ 100,000 in the next two or three years. Of course, such forecasts prompt investors to buy the asset immediately. Is it so unambiguous? The editorial staff of Btcnewsweb.com figured out whether it is worth buying bitcoin now and what are the pros and cons of such a move.
Read also: 5 ways to buy bitcoin.
Why bitcoin began to grow at the end of 2020
There are several main reasons for the growth of bitcoin:
- Breakthrough by technical analysis. Many analysts have called $ 12,500 the level that needs to be broken to enter a bullish trend. This is due to the fact that in August the cryptocurrency fell sharply after reaching $ 12,500. In October, it confidently surpassed this level.
- The COVID-19 pandemic that has caused global economic turmoil around the world. In an effort to prevent or mitigate disasters, governments print money as fast as they can. Of course, this leads to strong inflation, and many people are thinking about more reliable ways to store their funds than the rapidly depreciating fiat.
- A halving took place on the bitcoin network, that is, the reward received for the successful mining of a block was reduced by two. Now, about 900 BTC less is mined every day than before. And the number of traders is not diminishing, but only growing. Thus, the jump in the rate is quite justified.
- Expanding institutional participation. In recent weeks, many public companies and hedge funds have entered the crypto market and invested significant amounts of money in it. Thus, MicroStrategy announced the purchase of bitcoins in the amount of $ 250 million, and three weeks later the volume of its BTC investments was disclosed by Square.
All of this combined has resulted in growth that is fundamentally different from that of 2017 and is more robust and sustainable.
Where Bitcoin will move next – factors, expert opinions
Bitcoin is now in a period when an unprecedentedly large investor base is being formed, and negative news has virtually no impact on community opinion. Global macro investor Raul Pal says the current demand for bitcoin is the most dominant he has seen in his life and said that he sold all gold to invest in bitcoin and ether.
Stanley Druckenmiller, an American billionaire investor, said he has been working with Bitcoin for a long time. He predicts that BTC will outperform gold in the long term. In his opinion, cryptocurrency works even better than gold, since it is less liquid and more subtle. Druckenmiller noted in parallel that he expects the US dollar to fall in the next 3-4 years.
J.P. Morgan, whose director three years ago called bitcoin a scam and promised to fire any of its employees who would trade cryptocurrencies, has now agreed to provide banking services to Coinbase and expressed the opinion that bitcoin, given current trends, could double or even triple its rate.
Vladislav Antonov, an analyst at IAC Alpari, is convinced that at the moment there is more than 60% probability that the Bitcoin exchange rate will drop by 30% in the near future. He calculated that on a parabolic rally (if the rise in price is $ 3,200 in one week) it is better to exit the market so that there will be no disappointment in the future.
Mikhail Kogan, head of analytical research at the Graduate School of Financial Management, notes that the sharp rise in the bitcoin rate is due to the fact that large investors want to insure themselves against the negative effects of monetary policy observed in the world today. Previously, gold was used more actively for this purpose, but Bitcoin is interesting for its complete independence from politics and limited emission.
Anton Kravchenko, CEO of Xena Financial Systems, warns that it is too early to buy BTC, as the decline observed in early December may well be a sign of a downtrend, as a result of which the price will drop below $ 15,000. Andrey Podolyan, CEO of cryptorg.exchange, remains optimistic about about the fact that the direction of growth will continue, but only if the rate does not fall below $ 17,000. Yuri Mazur from the data analysis department of CEX.IO Broker predicts a bullish trend when bitcoin reaches $ 20,000. Otherwise, a correction can be expected even to $ 13 000.
Analyst Michael van de Poppe from the Amsterdam Stock Exchange also believes that the coin could drop to $ 14,000 if the rate falls to less than the support level ($ 18,900), which is what happened.
Interestingly, at the moment, institutionalists are more active in the crypto space than retail investors. The reason for this state of affairs can be called the fact that people are now more careful. Due to the pandemic and political complexities, many jobs and businesses are under threat. Therefore, if a person does not have enough extra money, then he refrains from high-risk investments. However, when compared with previous periods, often after the growth of institutional interest comes increased retail demand. If history repeats itself, then in the next one and a half years, the growth of BTC bit could be impressive.
The main global problem now is the coronavirus, we live in difficult circumstances. Oil prices are falling. At the same time, everything indicates that the cryptocurrency is an asset that is not correlated with the stock market, therefore it acts as an excellent tool for hedging stock risks. When the world recovers from the panic, it is highly likely that Bitcoin will continue to grow, thereby giving prospects for those who invest now.
Almost every week there is news that some large financial company has shown a loyal, or even purely positive attitude towards Bitcoin.
BlockRock’s CIO expressed the view that Bitcoin could largely take the place of gold in today’s world. A Citibank analyst published a report that users described as striving to the moon – in his opinion, BTC could reach $ 318,000 by the end of 2021. And J.P. Morgan claims in its November report that corporations are buying three times more cryptocurrency than before in 2020.
According to a November Bloomberg report, supply cuts augur well for Bitcoin’s growth in 2021. It is expected that the rate will exceed $ 35,000. Bloomberg also notes a significant drop in the volatility of the crypto market, while, for example, for gold, it remains at the same level.
It is impossible not to mention one of the main crypto news of the current year: PayPal will enable American users (of which about 200 million) to store cryptocurrencies Bitcoin, Ethereum, Bitcoin Cash, Litecoin on their platform (in the future, the list may be added). Also, from the beginning of 2021, sellers will be able to accept payments for goods or services through PayPal in the crypt. For many, this is an easy way to invest from the comfort of their own wallet. And, of course, this moment can be called a turning point: the use of cryptocurrency as a means of payment is a huge step towards its mass adoption.
Arguments against buying
Investing in cryptocurrency is different from investing in stock assets. Bitcoin is not regulated by anything, its price depends solely on supply and demand, is not supported by anything and correlates very strongly with the news background. Many governments are actively resisting the adoption of BTC by prohibiting firms from accepting payments in it.
Bitcoin is a high-risk asset. On the one hand, this is a good investment if you look only at the possible income. But we must not forget that this income will be possible only with a favorable combination of circumstances. And no one knows what will happen in the world tomorrow or the day after tomorrow. Therefore, many investors still continue to treat Bitcoin with caution and are convinced that it is not worth buying it, but it is better to give preference to less risky trading instruments.
How to buy bitcoin
Bitcoin can be purchased in several different ways:
- Crypto exchanges. For example, Binance, Currency.com, Bybit, EXMO, Payeer, FTX, Crex24, CEX.io, Livecoin, Kraken, Kuna and others. Most sites work with fiat and allow you to buy bitcoin by any convenient method by replenishing an exchange account and creating a buy order.
- Exchangers. A quick way to buy BTC with a large number of methods – from a card, various electronic wallets, as well as using more rare methods. Exchangers do not require verification and allow you to receive your crypto as quickly as possible.
- Payment systems. For example, AdvCash, Payeer, Capitalist, Perfect Money and others. They allow exchanging digital and fiat currencies within one account, as well as paying for goods and services with their help, where possible.
- Cryptocurrency wallets. For example, Jaxx, Exodus, Blockchain and others. Many bitcoin wallets allow you to either buy Bitcoin directly from a card, or exchange it for some altcoin on the built-in exchange.
- p2p platforms. For example, LocalBitcoins, Paxful, Cryptolocator and others. They allow you to safely buy cryptocurrency in any country, and transactions occur directly from user to user.
Each method has its own advantages and disadvantages, but the key point here is to choose reliable and proven services with a positive reputation.
In 2020, the cryptocurrency market is more promising than ever. Compared to the situation that took place just a couple of years ago, technology is now much more advanced, and institutional investors are taking an active interest in this area. There are all the signs that cryptocurrencies are with us for a long time. But they should not be viewed as a complete replacement for fiat, but rather as an alternative for those wishing to participate in a freer financial system.
Whether it is worth buying bitcoin now is up to you. We will not give investment advice – only you yourself are responsible for your money. The main thing is to remember the basic rule of the investor: you can only invest what you will not mind losing. Don’t take out loans and don’t waste your last family savings. This could lead to disaster. But if there is a certain amount of free money, then your right to try your hand at bitcoin investing.