DeutschPurchase recommendations for Bitcoin are regularly encountered by investors on websites that deal with cryptocurrencies and the associated trading exchanges. Unfortunately, the operators of the sites do not always inform visitors about the background and advantages of Bitcoin. Sometimes the advice is simply “Be sure to invest in Bitcoin”. Explanations? None. But it is precisely these explanations for buying the world’s first cryptocurrency that ultimately lead to the purchase decision as advantages of Bitcoins. As you will see below, there are good reasons for an investment. Which, incidentally, has also applied to altcoins such as Ethereum or Litecoin in recent weeks.
An early tip:
The fact that corrections have recently been made to many cryptocurrencies should not be misinterpreted. Such adjustments are – at least so far – to be expected from time to time with such volatile (fluctuation-prone) investments.
Acute Profit Opportunities Attract many Investors
Acute breakouts upwards or downwards can occur, for example, when large investors (also called whales) sell larger holdings of their deposits or wallets. By the way, it is precisely these movements in the market that speak in favor of a Bitcoin purchase from the perspective of yield-hungry investors. But even “normal” investors should read our reasons for getting started. This is how you understand which arguments hold the prospect of a continued price increase in the long term. The last significant jumps upwards show what is theoretically possible. Let us now turn to a more detailed analysis of Bitcoin and its long-term potential. Of course, the assessment is without guarantee. However, based on the developments in the first decade of the Bitcoin era and the increasing interest from many new target groups, it is certainly possible to formulate assessments.
Depending on which expert you ask, the recommendations for a Bitcoin investment are more or less euphoric. Some insiders predict golden times for cryptocurrencies in the coming years. Some experts now advise using Bitcoin as a lucrative alternative to the precious metal gold.
Currency & Economic Crises as a Breeding Ground for Crypto Openness
One argument for the supposedly imminent upward trends: the young age of Bitcoin. After all, the digital currency has only been around for a decade. Nevertheless, the performance is always very astonishing. Should Bitcoin continue to establish itself as an investment option alongside the commodity or stock market, the price could increase massively. Two often mentioned environments in which Bitcoin offers opportunities:
- Countries with hyperinflation
- Payments in the digital and mobile world
Bitcoin is already present and successful in both areas. For example, citizens of economically troubled states in South America such as Venezuela or Peru are increasingly enthusiastic about digital currencies in general. Bitcoin has also long been a popular payment model for payments across national borders – for example in apps or directly via the blockchain between individual users. New offers such as Facebook’s Libra will also help decide where the journey with digital currencies will go in the future.
Enthusiasm of Young Users Brings Bitcoin more Popularity
Young people in particular are open to the digitization of the currency market, including cryptocurrencies. Some analysts in the past even spoke of a kind of changing of the guard or generational change. This often applies above all to investors born around the turn of the millennium. As IT and Internet-savvy investors, they rely much more frequently and extensively on deposits in Bitcoin. For them, the cryptocurrency is more than just a technical gimmick – surveys confirm that the so-called “Millennials” buy and trade Bitcoin in order to realize returns or have a flexible means of payment at hand. Sending coins is often already part of everyday life for the young generation. As the heirs of tomorrow, young investors could help the Bitcoin price to massive gains in the coming years.
Probably at the expense of classic asset classes such as stocks, funds or savings accounts. So it’s no wonder that stock exchanges and banks are also increasingly working on futures, options and other products with crypto references.
Concerns on the Stock and Securities Market Increase Crypto Interest
Anyone who deals with the price developments of the past twelve months will notice: Bitcoin (BTC) has shown an impressive outperformance after its significant slump at the end of 2018, and the crypto industry as a whole is developing significantly better than the stock market. On the one hand, the price gains of digital currencies, on the other hand, the losses in securities due to the economic and political turmoil – the number of crypto fans also rose as a result of the global economic climate. Because the advantages of Bitcoin are obvious. For more and more investors, Bitcoin is becoming a store of value in economically difficult times.
Trade War between China and the USA Fuels the Crypto Market
The trade war between the People’s Republic of China and the USA is also making a contribution. The fear of rising tariffs is also driving some investors into the market for new asset classes that are not directly affected by such reports. Since Bitcoin is considered a relatively safe haven, it is more in demand when the stock market collapses. Newer ratings from crypto analysis companies attested the cryptocurrency Bitcoin a return of over 100% since the outbreak of the trade dispute. Especially since May 2019, there have been repeated dramatic gains. A timely entry would have brought investors real top returns. Shareholders and other classically oriented investors can only dream of such returns. While many asset classes have been under pressure since spring, Bitcoin has returned to records.
The explanation:
Anyone looking for opportunities for investment protection is increasingly ending up with cryptocurrencies. In this context, hedging also means diversification, as risk diversification. And so Bitcoin (as well as some other important coins such as Bitcoin Cash or Ripple) has long belonged to the portfolio via the wallet for many investors who want to distribute their liquidity risk. The fact that price movements in Bitcoin expressly do not show a clear correlation to stock prices and other products makes digital currencies an exciting approach for multifaceted investments overall. Of course, a certain willingness to take risks is required on the part of investors.
Potential for Price Increases is Basically Limitless
Bitcoin is of course also interesting because of the options for further growth: not with regard to the available coin quantity, but with regard to the upcoming possible uses. It seems certain that previously skeptical economic sectors will soon open up even more to Bitcoin and other currencies in connection with the blockchain. Cooperations already exist, for example, within the fashion industry. The Bitcoin competitor IOTA, in turn, is in demand from some automotive manufacturers as part of new technological developments. Such trends always advance the entire crypto industry. As a means of payment, Bitcoin has gained importance within a few years because digital currencies are mathematically “scarce” – this formulation refers once again to the unit limitation. In parts, similarities to physical money are evident. The growing interest in the blockchain undoubtedly benefits the current market leader with a view to the big picture.
Bitcoin: Fast Means of Payment with Low Costs
The decentralized orientation is another buying argument and an advantage of Bitcoin. The same applies to the good verifiability of the currency. After all, it can be done from anywhere in the world, so that users always have their BTC digitally at hand, anytime and anywhere. Many industry experts see Bitcoin as a tool for so-called “cross-border payments”, i.e. as a means of payment beyond national or cultural borders. Even high amounts can be sent quickly and easily from A to B in Bitcoin. So far, this may be a thorn in the side of the classic financial world, but in the future the banking sector will inevitably have to accept cryptocurrencies such as Bitcoin. First projects of this form already exist, for example at the US bank JP Morgan. This interest can and will bring further interest to the crypto market.
Bitcoin Forecasts – a Key Purchase Incentive?
Forecasts and analyses of market movements should always be treated with caution. Predictions of possible jumps in the Bitcoin price to 1 million francs or more should not be taken too seriously. Often the originators of such statements – for example the self-proclaimed crypto guru and cybersecurity professional John McAfee – are primarily interested in a large media response. Their statements, on the other hand, unfortunately often lack the hoped-for truthfulness. But as always, there is a glimmer of truth. Because serious analysts have repeatedly been right with their assessments of new highs. Even if the psychologically important price mark of 10,000 US dollars currently marks the limit: Bitcoin has in the meantime certainly proven that it is destined for higher things.
At the end of June 2019, the token proved what jumps it is capable of. At that time, the price quickly rose into the area above USD 13,000 – and that is where some experts see the currency well located in the medium term at the latest. On the other hand, it is precisely the acute movements with which Bitcoin attracts risk-loving investors.
Advantages of Bitcoin – which Aspects Speak for a Bitcoin Purchase Recommendation?
Let us summarize the most important factors at this point, which make both a short-term and a long-term investment seem sensible.
- Bitcoin as an alternative when classic markets weaken
- Cryptocurrency benefits from political and economic conflicts
- flexible applicability as a global means of payment (fast & cheap transactions)
- Increase in interest for Bitcoin, Altcoins & Blockchain in the economy (e.g. banks)
- Cryptocurrencies are increasingly regarded as reputable through regulation
- Investors can distribute risk with Bitcoin & realize acute high profits
- Deflation in real currencies strengthens Bitcoin demand
Finally, let us point out another technical term that can speak for a Bitcoin purchase. As part of Bitcoin mining, the blockchain system from time to time provides for a so-called “halving”. Those who actively mine receive gradually lower rewards as a result of this measure. For Bitcoin investors, however, this halving represents an additional increase in value in the long term. Clear price gains have usually been recognizable in the run-up to such steps. At the same time, there are cyclical price losses in the context of the following. These in turn are a good moment for a first entry into the market through a Bitcoin purchase.
Our Conclusion – Advantage of Bitcoin Speak for a Purchase Recommendation
Bitcoin holders who do not want to exit the market when prices fall can find an alternative in trading. Price bets on rising or falling prices (as with trading in contracts for difference, CFDs) allow investors to hedge their Bitcoin deposits. Losses can thus be offset with a good sense without sales or even reversed into a profit. Investors with a long-term perspective, however, have been able to achieve considerable returns with the world’s first cryptocurrency for years through targeted investment planning. Alternatives such as the Bitcoin Futures of the provider Bakkt starting in the USA can in turn be an innovative approach with Bitcoin reference. In this way, new asset classes are gradually developing without investors necessarily having to make “physical” purchases in order to be able to participate.
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***Disclaimer: The assessments presented on this page do not represent an investment recommendation. They are only an assessment. ***
