Is Another Bitcoin Crash a Foregone Conclusion?
There is one simple guideline to investing in assets, including Bitcoin, and that is to learn to accept volatility. Given the volatile nature of the investment business, where the graph swings violently, riding the wave requires a strong heart. Bitcoin trading is no exception.
Since the enigmatic Satoshi Nakamoto gave the original Bitcoin specification with proof of concept in 2009, a lot has happened. On February 9, 2011, two years later, the cryptocurrency (or crypto) reached 1:1 parity with the US Dollar. This indicates that a Bitcoin can be purchased for one dollar. Bitcoin has been on a roller coaster ride since then, peaking at $62,006.92 on April 17, 2021. To put things in perspective, the value of Bitcoin has increased by almost 62,00,600 percent from February 9, 2011, and April 17, 2021. Yes, the figure may be perplexing, but that is exactly what it is. The cryptocurrency was trading at $48,616.15 on August 29. However, the $1,000,000 threshold expected by optimists has yet to be reached.
With a ceiling of 21 million coins, Nakamoto established a separate identity for the world’s most popular cryptocurrency. The fluctuation is only projected to increase with a circulating supply of about 18 million Bitcoins compared to the aforementioned maximum cap. Regulatory remarks from Russia and China, as well as investor peculiarities like Elon Musk’s and Michael Saylor’s, only add to the Bitcoin world’s edge-of-seat excitement.
Bitcoin’s Crash History
Since it first appeared on the investment horizon, Bitcoin has gone through multiple small and large ‘Boom and Bust cycles. Here are two notable crashes that are still discussed.
- The coin lost more than 80% of its value between April 10 and April 12, 2013.
- The cryptocurrency’s value peaked in December 2017 at roughly $20,000, then it quickly plummeted after that.
When it comes to Bitcoins, there are differing viewpoints. Bitcoin, according to Warren Buffett, is a dangerous and speculative asset. Support from critic-turned-fan Saylor makes Bitcoin investors sing Yeh Dil Maange More on the other end of the trading spectrum.
Despite the uncertainty, what makes Bitcoins so appealing is that, unlike institutional investors who buy in vast quantities, individuals can possess a fraction of this cryptocurrency down to the eighth decimal point. It seems reasonable, then, that Saylor tweeted last year that he has 17,732 Bitcoins worth $9,882 each. This statement was made long before the business analytics platform he leads, MicroStrategy. In comparison to regular investors, institutional investors are increasingly putting money into Bitcoins.
Will there be a new Bitcoin crash?
Any investment is made largely for the purpose of generating a profit. The investment would be higher if the rewards were higher. Saylor and his ilk shared this mindset, preferring Bitcoins to gold. Bitcoin outperformed all other assets in 2020, returning 318 percent.
There has been a constant influx of positive headlines on the Bitcoin front during the last year or so:
- MicroStrategy bought a total of 38,250 bitcoins worth $425 million in September 2020 and then announced plans to raise another $537.2 million to buy even more bitcoins.
- PayPal clients will be able to buy, sell, and keep bitcoin using their online wallets starting in October 2020.
- Tesla, the electric car company, said in February that it had purchased $1.5 billion in Bitcoins. The company has stated that they are likely to accept cryptocurrency as a form of payment.
- El Salvador recently made Bitcoin legal tender, and Argentina’s president has stated that he is open to considering cryptos as legal tender.
Bitcoin’s popularity has risen as a result of these tales.
Returning to the point made at the beginning of the story, The price of bitcoin and other cryptocurrencies is extremely volatile. Their prices will constantly fluctuate between highs and lows, making it difficult to anticipate whether they will rise or fall. Nobody can affirm that with any degree of precision or assurance. However, as an investor, you might exercise caution when investing in Bitcoins.
Rupee-cost averaging is one strategy you can use. Instead of buying Bitcoins in one go for a large chunk of money, you can spread your investment out over time. This will protect you from Bitcoin’s volatility to some extent while also providing you with higher rewards.
The best moment to acquire Bitcoin was in 2009, and today is the second-best time. ZebPay enables you to invest in Bitcoins in a safe, secure, and simple manner. You may start your bitcoin journey with ZebPay for as little as Rs 100. Begin today and prepare to ride the cryptocurrency wave!
The most recent report card on Bitcoin
December 16, 2020: Bitcoin reaches a new high of $63,375 for the first time. April 13, 2021: Bitcoin reaches a new high of $20,000/coin for the first time.
- Bitcoin falls below $30,000 for the first time in five months on June 22, 2021.
- Bitcoin rallies above $40,000 on August 2, 2021, its highest level since May.
- On August 23, 2021, Bitcoin surpasses $50,000 for the first time.
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