Bitcoin (BTC) was created in 2009 by the enigmatic Satoshi Nakamoto. It traces its origins all the way back to 1998, where computer programmer Wei Dai posited the idea of a currency that was entirely digital. Lets find the answer to is Bitcoin a worthy investment in 2021:-
Since then, Bitcoin has become something of a household name. What was once a medium of exchange used by surfers on the deep web is now the most popular cryptocurrency in the world with a market cap of $761 billion.
2020 was a heady year for Bitcoin and other cryptocurrencies as valuations continually broke new records. In the aftermath of a contentious U.S Presidential Election and looming economic meltdown, the cryptocurrency market erupted on the mainstream.
But as the events of the first half of 2021 have shown us, the volatility of the cryptocurrency market cuts both ways.
On the tip of everyone’s tongue are a series of tweets from Elon Musk; billionaire and founder of the company Tesla. With just a few simple remarks, Musk sent investors scrambling to get ahead of the curve as the prices of Bitcoin, Dogecoin, and other cryptos went haywire.
When he announced that Tesla would first accept Bitcoin payments, crypto enthusiasts were over the moon as Bitcoin prices shot up. But within just a matter of months, Musk reversed this decision claiming that Bitcoin mining activities were not “green”.
This announcement sent the crypto market into a nosedive as investors exited the crypto market en-masse. Having been accused of blatant market manipulation, the eccentric CEO has once again announced that Tesla may start accepting Bitcoin once again.
Naturally, this triggered a wave of optimism in the market as prices of Bitcoin have once again risen at the time of writing.
With so much volatility, some investors are naturally put off by the extreme price fluctuations. For others however, the constant market volatility presents plenty of opportunities for a savvy investor to make a lot of money in a short amount of time.
So naturally, the question on everyone’s mind is this – is it worthwhile investing in Bitcoin in 2021?
Well, the answer may actually surprise you, and here’s why:
Extreme Market Volatility is Both Good and Bad
The cryptocurrency market is known for its extremely volatile nature. Trading continues 24/7 without pause and prices have been known to suddenly shift within a matter of minutes with no warning.
This has led some to describe investing in cryptos as being akin to gambling. Given how your capital can suddenly multiply or disappear overnight, it’s easy to see why this comparison has been made.
However, the truth is that the extreme volatility comes about because the crypto market is totally free. Governments or financial bodies do not interfere with the supply and demand for cryptocurrencies.
This means that the supply and demand of cryptocurrencies is totally reliant on the community. For a savvy investor, this means learning how to recognize when the market dips and to get abroad the crypto wagon.
Given that cryptos are a relatively new asset, the true value of the asset has not yet been determined. Along the way, price fluctuations will lead to prices rising dramatically – and it is during this time that an investor can liquidate his/her assets for huge profits.
Before you go buying cryptos left, right, and centre, do remember that such a volatile market can be difficult to predict. So be sure to assess your risk profile and only invest what you can afford to lose.
Bitcoin is Resistant to Inflation – And Can Be a Great Store of Value
Bitcoin is widely regarded as being the gold standard for cryptocurrencies. Being the most popular and widely-accepted cryptocurrency, it can be easily liquidated in exchange for fiat currencies should the need arise.
Also, Bitcoin is entirely unregulated and decentralized – meaning that it is technically unaffected by inflation and government intervention.
To keep their economies afloat, governments around the world have been continually injecting cash into the market in the form of stimulus packages and wage subsidies.
This has led to an oversupply of cash in the market which in turn has driven up inflation. As a result, investors have turned to cryptocurrencies like Bitcoin to shore up the value of their cash assets.
Due to its limited supply, Bitcoin is theoretically inflation proof. And now as the global economy reawakens, we will see a continual rise in inflation.
All of which will drive up the prices of BTC as investors allocate more funds into the crypto market. Hence, making the case for why you should invest in Bitcoins this 2021.
To find out more about Bitcoin, its past and future, check out the top 12 Bitcoin documentary movies to watch in 2021.
Digital assets are one of the most exciting developments that have come along in recent years. While Bitcoin and other cryptocurrencies are excellent investments, their extreme volatility means that you should always evaluate your risk exposure before taking the plunge.