On January 2017, Bitcoin owners had one single goal to accomplish – to ensure that the cryptocurrency attained the $1,000 mark. Luckily, the cryptocurrency achieved that milestone and continued to increase.
As of November 29th 2017, Bitcoin finally hit the $10,000 mark. Coindesk reported that Bitcoin achieved the historic milestone around 1.30 AM UTC or 9.30 AM Hong Kong Time. As a result, Bitcoin now has a higher worth than renowned companies like GM and Boeing.
At the time of writing, the Bitcoin price was $11,206.96 with a 0.23% rise.
Today, countries like China together with institutional investors and traders use Bitcoin as a safe haven asset just like gold or Swiss francs. Why? Investors and traders prefer Bitcoin to protect their assets against economic troubles.
What makes Bitcoin attractive as a safe haven? Unlike other currencies and assets affected by the performance of the global economy and reserve currencies, Bitcoin is the only cryptocurrency dependent on the market.
So, Is Bitcoin A Good Long Term Investment?
At the start of 2017, Jamie Dimon, Chairman and CEO of JPMorgan Chase referred to cryptocurrencies as fraud. He went ahead to say that those who invest in cryptocurrencies are stupid. When he was saying this, Bitcoin price was already past $1,000. As of today, the cryptocurrency has returned over 900%.
Savvy financial experts understand that this type of return on investment is unheard of especially when it comes to the stock market. This means, if you had invested $500 at the start of 2017, you probably would have returned more than $5,000 by the end of the year (2017). What you need to know is that there are a lot of misconceptions surrounding long term Bitcoin investment. This is attributed to the traditional investor point of view.
What do I mean? Investors today are looking for short term results and that is why long term investments are not part of their plans. As of now, Bitcoin is highly volatile but on a short term basis. Due to this, Bitcoin is considered a long term investment. Investors look at the short term volatility rate as a clear indicator of growth. It is expected that as time progresses and the development of cryptocurrency matures, Bitcoins volatility rate will subside.
What makes Bitcoin better than any other asset?
For starters, Bitcoin can easily replace cash. Today, there are thousands of online retailers who accept Bitcoin. Furthermore, start-ups have rolled out mobile wallets for Bitcoin allowing people to send and receive cryptocurrencies. This is not the same with an asset like gold.
Although you can access gold ATMs in places like Dubai, they are not accessible to all. Secondly, Bitcoin is highly portable thanks to digital wallets. As a result, people have the opportunity of sending and receiving small and large amounts of cryptocurrencies wherever they are.
Lastly, Bitcoin is safer. Unlike in the past when cryptocurrency owners were worried about their cryptocurrencies being hacked, today one can simply store them in cold storage, much safer.
Indicators Of A Long Term Investment
1. Market share
Here is what you need to know, the larger the market share, the more dominant a cryptocurrency is. This makes it a good candidate for long term investment. At the time of writing, Bitcoins market cap was $191 Billion. This indicates that the cryptocurrency has over 70% market share.
2. Transaction volume
At the time of writing, Bitcoin had a transaction volume of $7 billion within a 24 hour period. Transaction volume is an important indicator that signifies investor interest – short term and long term. Since the beginning of 2017, the transaction volume of Bitcoin has been on an uptrend making it a good candidate for long term investing.
3. Market news
Just like other securities, market news affects the long term viability of a cryptocurrency. For example, if a cryptocurrency is experiencing trouble, its price will be affected negatively leading to a decline. As an investor, it is highly advised to be reactive to market news. Our advice – if you are planning to invest in Bitcoin on a long term basis, stay up to date with market news.
Utility refers to a situation whereby a cryptocurrency like Bitcoin does not possess practical use. Due to this, the cryptocurrency will have no value thus it will maintain lower market price making it unsuitable as a long term investment. A good example is how users are able to launch and build apps on Ethereum.
In August 2017, Bitcoin split into two hard forks – Bitcoin and Bitcoin Cash. In October 2017, another hard fork was created – Bitcoin gold. That is not the end. More Bitcoin hardforks have occurred and more are planned for the future. What is the reason behind the hard forks?
Well, this is done to allow more transactions to be conducted via the Bitcoin blockchain. Before the hard forks, it was estimated that at a time will come when transactions on Bitcoin will cease but due to the hard forks, Bitcoin has become a worthy long term investment.
Learn more factors affecting cryptocurrency prices.
Let’s face it. Currently, many people view Bitcoins performance as a bubble. Due to lack of an intrinsic value, it raises the question of whether Bitcoin is a viable long term investment.
As said earlier, Bitcoin is very volatile but despite this, its demand has sky rocketed even after the completion of two hard forks – Bitcoin Cash and Bitcoin Gold. If the high demand continues, Bitcoin price will continue to experience an uptrend which means if you make a long term investment today, you will reap huge returns in a year or more.
What you need to know is that due to the current high price of Bitcoin, the investment is perfect for large institutional investors and traders. If you are just starting out, I recommend you invest in Bitcoin Cash, Bitcoin Gold, Dash, Litecoin or Ethereum.
If you are in doubt, talk with a financial expert who has a proven track record.