Bitcoin has experienced a sharp drop in price in recent months. While this scares inexperienced investors, experienced investors are realizing that the current low prices make Bitcoin a very good place to invest at the moment. What are the ways and methods to invest in Bitcoin?
In this article, we will introduce you to 4 different ways to invest in Bitcoin. We’ll also go over the advantages and benefits of the different methods.
What is Bitcoin?
Bitcoin is the first and most important cryptocurrency. It existed since 2008 and was based on a white paper by Satoshi Nakamoto. Bitcoin is based on blockchain technology. The blockchain offers a decentralized booking system in which transactions are carried out peer-to-peer without a third intermediary.
With Bitcoin, a decentralized currency was created over which no higher authority such as banks or states have any control. Over the years, Bitcoin has evolved from a pure currency into a popular investment object in which many small investors want to invest. The price of Bitcoin has risen from less than 1 dollar to a five-digit value in recent years.
How did Bitcoin Price Perform recently?
The Bitcoin price has risen massively over a long period of time in recent years. Bitcoin has increased in value over the years. In November 2021, the Bitcoin price was at an all-time high of over $68,000. Since this value, the Bitcoin price has fallen continuously.
From the beginning of November to the turn of the year, the Bitcoin price fell by around 30%. This drop continued into January and partly into February. In March and April, the Bitcoin price was able to stabilize again slightly. Then, in May and June, there were more severe crashes. Bitcoin fell below $20,000 in June. Since then, the Bitcoin price has stabilized again.
Why should I invest in Bitcoin Today?
At the moment, the price of Bitcoin is extremely low if we compare the prices with the prices from a few months ago. The crypto market is in a bear market. That means prices are generally falling. However, it also means that another bull market is imminent in the future.
In the long term, it is worth investing in Bitcoin now. If another bull market comes, you as an investor in the bear market have bought at comparatively extremely cheap prices. However, you have to think long-term and not hope for short-term gains, because the bear market could last longer.
How can I invest in Bitcoin?
Bitcoin can be acquired in different ways. On the one hand, you can invest in the cryptocurrency itself. Then there are various financial products that represent the value of Bitcoin. There are also stocks that increase in value with the value of Bitcoin and in which you can invest.
In the following we present 4 ways how you can invest in Bitcoin:
1. Acquire Bitcoin as a cryptocurrency
You can purchase Bitcoin as a cryptocurrency on various platforms. You can either use crypto exchanges or crypto brokers. The cryptocurrency itself has enormous growth potential. However, Bitcoin is also a risky investment, which can fluctuate greatly in who.
When you invest in Bitcoin, you acquire digital money in the form of data. The ownership structure is entered on the blockchain. The access data to the blockchain are stored in so-called wallets. In this article, you will learn more about the forms of wallets available for cryptocurrencies.
Crypto exchanges specialize in cryptocurrencies. You can use a wide range of different exchanges. Well-known exchanges for investing are Bitfinex , Binance , Coinbase and Kraken .
2. Invest in Bitcoin derivatives
Derivatives offer investors the opportunity to invest in Bitcoin with relatively little capital. You don’t need a wallet. An investment in Bitcoin derivatives is flexible and speculative. For example, you can also bet on a falling Bitcoin price.
Bitcoin CFDs are particularly popular. These are contracts for difference, a security that replicates the value of Bitcoin. You can bet on rising and falling prices, as well as with or without leverage on Bitcoin. Bitcoin CFDs are offered online through various brokers.
3. Bitcoin ETFs
ETFs (Exchange Traded Funds) are a representation of the Bitcoin price in the form of a fund. ETFs allow investors to invest in Bitcoin without purchasing Bitcoin itself. These form a good alternative to derivatives as the latter is extremely speculative.
“Bitcoin stocks” are stocks of companies that benefit from the growth and appreciation of Bitcoin. This includes shares in crypto exchanges such as Coinbase, shares in companies whose strategy focuses on acquiring cryptocurrencies (Microstrategy) or manufacturers of the hardware required to create Bitcoins (NVIDIA).
You can purchase many of these stocks through online brokers. With these stocks, it’s important to note that depending on the company, there are numerous other factors that affect the stock’s growth in value. In this article, you will get more information about Bitcoin stocks.