Should you invest in Bitcoin in 2021?
Ever since it was created in January 2009, people have been asking themselves the question of whether or not they should invest in Bitcoin; this question will be answered in this article.
Review: how did Bitcoin price change over the years?
Cryptocurrencies are largely known for their volatility, which means that their prices are unstable and hard to predict. Bitcoin, for instance, has known a lot of ups and downs throughout the years.
In 2017, Bitcoin’s performance was great, its price reached 1,000 $ exactly 8 years after it was created. Then, it rose to 4,490 $ in August before breaking the record and hitting the 19, 981 $ barrier in mid-December for the first time in its history.
However, 2018 and 2019 were harsh for Bitcoin. It lost more than 70% of its value in 2018, dropping to less than 3,500 $ in exactly a year from reaching its all-time high. Although it recovered a little of its value in 2019, it was still far from the bull run.
The start of 2020 was not encouraging either, and people who have invested in Bitcoin were waiting impatiently for Bitcoin’s third halving that was expected to provoke a bull run in May. But the Bitcoin price started recovering before the halving, and continued to rise until it broke its previous record reaching 20,000 $ in mid-December, then 41,962 $ in January 2021. Bitcoin finally hit another record after climbing to 58,000 $ in February.
Bitcoin largely benefitted from Tesla’s recent investment in Bitcoin and PayPal’s announcement concerning the launch of new services enabling their US users to buy, sell and hold cryptocurrency directly through their accounts.
How to buy Bitcoin?
Bitcoin is usually bought from cryptocurrency exchange platforms (see: beginners guide to buying bitcoin), like: Coinbase, Binance and Cash App.
Why to invest in Bitcoin?
The Covid-19 pandemic has created a new financial crisis, and it seems as though this made people start considering Bitcoin as a safe haven asset.
Data shows that the numbers of people who have Bitcoin wallets have escalated quickly during 2020 and continue to rise in 2021, which shows that the global adoption of Bitcoin is increasing.
This has occurred just after the third halving, which means that the number of bitcoins awarded to miners was, again, cut by half. This strategy guarantees that the number of bitcoins will always be limited in the world, and maintains the scarcity of this cryptocurrency. So, the Bitcoin supply becomes lower with time, while the demand is only getting higher.
Data also shows that Bitcoin was the best performing asset class of 2020, which encouraged a lot of people and companies to invest in this cryptocurrency, and thus, making its price rise even more.