Buying Bitcoins (BTC) through a cryptocurrency exchange platform is the most straightforward way to invest in this crypto. However, people who do not want to rely on crypto exchanges can still invest in Bitcoin through any of three ways.
How to Invest in Bitcoin
The easiest and safest way to invest in Bitcoin is by buying and trading with a cryptocurrency exchange. However, other popular options include the following.
- Buy Shares
Some companies accept Bitcoin payments for their stock market shares. It will be wise to invest Bitcoins in those companies with credibility and trustworthiness in the market.
- Bitcoin ETFs
Some platforms offer Bitcoin exchange-traded funds for people who do not want to trade in Bitcoins but would like to invest in the fund. The ETF reflects Bitcoin’s existing value, allowing people to trade without using their BTCs.
- Blockchain Technology Firms
One can also put his money in a blockchain network, allowing the person to leverage the power of multiple cryptocurrency systems for more robust results.
Why Did Bitcoin’s Value Drop?
Bitcoin and other major digital currencies went on a downward spiral from December 2021.
According to Coinbase, Bitcoin is worth $37,261 by the end of January this year, a far cry from its $69,000 November 2021 value.
Experts say that the Federal Reserve’s January 2022 meeting on interest rates is one of the reasons for the continuing downward trajectory of shares, stocks, and cryptos.
Investors are jittery about the uncertainty surrounding US and UK interest rates.
Moreover, China moved to ban cryptocurrencies altogether, labeling digital currency transactions illegal.
There were also rumors of Russia joining China in banning crypto mining and trading.
Speculators also see more stringent cryptocurrency regulations in the future.
Bitcoin’s Ups and Downs
Not everyone likes Bitcoin. Fans consider Bitcoin the epitome of market-disrupting freedom, empowering them to perform transactions without financial institutions hawking over them.
On the other hand, detractors look at Bitcoin as the devil’s creation because of its unregulated nature and extremely high volatility. They might be right.
Bitcoin went on a roller-coaster ride starting in December 2020. Although Bitcoin and crypto experts remain calm amid these ups and downs, fans cannot help worry about the future of their investments.
Most people are asking if Bitcoin is about to crash.
The principal issue about Bitcoin and other cryptocurrencies is that their prices do not have intrinsic values for support.
Sparrows Capital’s investment manager, Mark Northway, puts it bluntly that confidence is the only thing that drives cryptocurrency prices.
The more confident the market is in Bitcoin and other cryptos, the higher are their prices on the market.
Conversely, dwindling public confidence in cryptocurrencies can also spell a downward trend for these digital currencies. Hence, people who want to invest in Bitcoin should prepare for a roller coaster, if not a bumpy, ride.
Is it Possible to Lose All of One’s Money in Bitcoin?
Cryptocurrencies are not as safe as conventional investment instruments, such as stocks, bonds, and funds.
It is a risky endeavor that can spell financial doom to the uninitiated or those with poor self-control.
It is worth noting that Bitcoin’s value is speculative, moving with conjectures and sentiments instead of objective information.
People should also know that the UK’s Financial Conduct Authority does not regulate cryptocurrencies, such as Bitcoin. Hence, a person can lose all his money to Bitcoin.
How Do People Lose Money in Bitcoin?
One of the easiest ways people lose money in Bitcoin is by selling it at a price lower than its value at purchase.
Some Bitcoin investors worry about the plummeting value of their favorite cryptocurrency, selling it at a losing price.
Chainanalysis, a crypto data firm, says that people can also lose money in Bitcoin from forgetfulness.
One in five cryptocurrencies gets forgotten by investors, accounting for $140 billion in losses.
On the other hand, Atlas VPN says crypto investors lose about $10 million worth of digital currency to hackers, scammers, and cybercrime operatives every day.
Although physical cryptocurrency wallets are more secure than online versions, they are also at risk for theft.
Hence, investors should not put all their money in Bitcoin or any other single cryptocurrency.
It would be best to distribute the risk by investing in other cryptocurrencies or investment tools, such as funds, bonds, and stocks.
Researching and gaining more knowledge about Bitcoin or cryptocurrency investments can also help people make the most of their money.