Dec 07, · What is the best investment strategy for buying Bitcoin? If you want to invest in Bitcoin, the best strategy for investing will again depend on your needs and lifestyle. Your financial advisor will be the best person to talk to. That said, some people like to use a strategy called ‘dollar cost averaging’. With this strategy, you buy a little at a time every day, week, or month, etc. And it is the strategy I recommend for every regular person thinking of investing in bitcoin. First, I will explain the theory behind the method, then I will explain the method in a list. The. Nov 30, · There are several options for investors to gain exposure to Bitcoin via traditional stock exchange investments. Grayscale Bitcoin Trust is a closed-end fund whose primary asset is Bitcoin.
Bitcoin investing strategy5 Things to Know Before Investing in Bitcoin ( Updated)
The most popular and valuable cryptocurrency on the planet, bitcoin, ended Saturday, Oct. There are a number of reasons for bitcoin's ascent in For example, bitcoin's block rewards -- i. Historically, bitcoin has run up substantially prior to a halving event. Bitcoin has also benefited as a safe-haven investment in the wake of the coronavirus recession.
With cash use discouraged due to possible virus transmission, a strong case has been made for digital payments to replace cash. Also, don't forget that bitcoin acts as the bridge currency that investors often have to purchase if they choose to invest in other less-common cryptocurrencies those not named Ethereum or Ripple.
This creates a steady level of demand and ownership for what's perceived to be a limited token. But if you ask me, there are much better ways to invest your money than by purchasing bitcoin. The issue with the most popular cryptocurrency is twofold. First, there's a scarcity-versus-utility problem. Since a substantive percentage of outstanding tokens are held by investors who have no intention of using their coins to make purchases, the utility of bitcoin as a purveyor of digital transactions is quite low.
Since programming is all that keeps bitcoin's token limit at 21 million, this could be overridden in the future. Thus, bitcoin either has limited utility or scarcity -- not both. The other issue I have with bitcoin is that fiat currencies are being tested in conjunction with blockchain. The real value in crypto technology is in the underlying blockchain, not the token itself. Since buying into bitcoin gives folks no ownership of the blockchain, investors are, arguably, buying into the wrong asset.
Instead of buying bitcoin, here are three considerably smarter stocks to buy with your hard-earned money. Square's longest-running operating segment, and the one most folks are going to be familiar with, is its seller ecosystem. Square has been supplying point-of-sale devices and analytics to small businesses for the past eight years. However, the long-term growth driver for Square is peer-to-peer digital payment platform Cash App. Cash Card is a traditional debit-card that links to a users' Cash App balance.
While Cash App does collect merchant fees and expedited transfer fees from its users, it's especially popular for bitcoin exchange and investment. If you want to put your money to work in a company with a bright future and exposure to bitcoin, Square is it. Sea gives investors access to Southeastern Asia , which remains a largely underbanked region of the world, yet is experiencing a windfall of growth from a burgeoning middle class throughout the region.
To date, Sea's gaming division has been its breadwinner. But the dominance of digital entertainment won't be long-lived for Sea Limited -- and that's actually a good thing for investors. The far more exciting operating segment for the company is its Shopee e-commerce platform.
Without question, the pandemic played a role in bolstering online orders throughout Southeastern Asia. But it's not as if Shopee wasn't growing like a weed before the coronavirus pandemic hit. Additionally, Sea launched SeaMoney in , which today provides mobile wallet services and payment processing for individuals and businesses.
Investors can also easily buy index-linked products. What about comparisons to gold? Do investors also see bitcoin as an inflation hedge and a safe-haven asset class? Instead, it does the opposite: its value tends to go up in confident bull markets and fall in fearful bearish ones. Technical analysis requires less efficient markets to work. A study by the U. Fortunately for cryptocurrency investors, BTC today still resembles the inefficient systems of the s.
Bitcoin trades on multiple disconnected exchanges, making it difficult to determine its exact price at any given moment. And investors still routinely accuse market makers of manipulating prices. These factors make trend-following an essential tool in tracking the self-reinforcing prophecies of bitcoin price. Below is a graph of RSI, a standard mean-reversion indicator. A more aggressive approach would have pushed returns even higher.
Which path with bitcoin take? If these expectations play out, bitcoin investors will see good times ahead. But if the economy suddenly grinds to a halt, then bitcoin price will certainly fall. As trading matures, technical factors will eventually take a backseat in determining bitcoin price. In their place, fundamental factors will start to take over: matters such as transaction fees, forks, user adoption, and the general demand for cryptocurrencies.
My colleagues at InvestorPlace have a friendly bet: which will reach 40, first: bitcoin or the Dow Jones? And either could be right. But for , how to invest in bitcoin remains clear. On the date of publication, Tom Yeung did not have either directly or indirectly any positions in the securities mentioned in this article. Log in. Log out. About Us Our Analysts.
So, what drives bitcoin price?