Is it a good time to buy Bitcoin? Here is a short analysis
Is it a good time to buy Bitcoin? Bitcoin Performance
Is it a good time to buy Bitcoin? Bitcoin Recovery
BTC’s price is up 25% from the bottom of June 18th. This is after falling nearly two-thirds in the last 7 months. Over the last 4 weeks, BTC has been making higher lows. It remains to be seen if this sustains longer as more data pours out in the next few weeks.
Between 2017 and 2019 December, the Fed reduced the size of its balance sheet, Bitcoin traded in a volatile manner during that period losing and gaining large proportions in a very short time.
Is it a good time to buy Bitcoin? 5 Reasons
It is a good time to buy Bitcoin for long-term investors (3 to 5-year horizon) –
- BTC has an excellent track record of delivering positive returns in most of the years during the last decade
- BTC has value both in terms of a store of value as well as currency for payment. It sure isn’t where Gold is or where the Dollar is at the moment but it is headed that way.
- Bitcoin prices are related to disposal incomes and liquidity as the willingness to try a relatively new store of value or currency goes up when there is enough liquidity. The recent fall in Bitcoin price is related to falling liquidity. Historically, liquidity improves at some point in time and hence one can say Bitcoin will recover as liquidity returns to the market
- Weaker holders of Bitcoin have exited over the last 7 months and some more will exit in the next few weeks. With only the strong and those who invested at these levels remaining, BTC will gradually recover
- Some compare Bitcoin to the Tulip Mania and others to the Dot Com Bust. But the fact is that the Tulip Mania and Dot Com boom lasted about 3 years each. Bitcoin has been tested repeatedly over the last 12-15 years in this modern age of computers and boom and bust cycles. So yes, the comparison is incorrect and Bitcoin will recover again.
Bitcoin Price Prediction: Most Bitcoin forecasts for the rest of the year are quite optimistic though it is also expected that there would be above normal volatility.
Is it a good time to buy Bitcoin? A few Caveats
- While there is some evidence of the BTC price has reached the bottom for the year, it is not definitive.
- The factors in favor include the Supply of Bitcoins to the exchanges has fallen, Whale purchases have surged, Crude Prices have fallen in the last 3 weeks and some Technicals are suggesting a Bitcoin bottom
- But the Macros don’t favor Bitcoin yet. We do not have visibility on inflation or on how much more the Fed will squeeze the Liquidity.
Therefore, the risk of Bitcoin falling further still remains. However, the risks are lower than it was three weeks ago. An Investor willing to handle the risk of a move lower could invest now.
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Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Index or Individual Stocks. Please consult a registered investment advisor to guide you on your financial decisions.