Bitcoin has created a new all-time high above $38,000
Its market cap now sits above $630 billion as investors rush in
FOMO investors are usually left with losses
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When is the best time to buy Bitcoin?
A complete guide for making Bitcoin purchase
Brief History of Bitcoin
Bitcoin is the world’s first and most popular cryptocurrency. In October 2008, the creator(s) Satoshi Nakamoto officially announced a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”.
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The invention of blockchain technology (the backbone of Bitcoin) was also contained in this white paper. Free of third-party oversight, Bitcoin offers a unique alternative to world government currencies.
The first real-world use of Bitcoin in May 2010 when an individual paid 10,000 Bitcoins for the delivery of two pizzas. Crazy right? The equivalent was $10,000 Bitcoin was $25.
In the next decade, we saw Bitcoin grow by leaps and bounds. A key point in Bitcoin’s history was in December when it peaked at around $20,000 per coin.
Bitcoin currently has a market cap of $631 billion with 18.5 million coins in circulation. When the white paper was announced, Satoshi noted that there will only be 21 million Bitcoins. This apparent scarcity has led some to call Bitcoin “digital gold.”
Before You Invest in Bitcoin
Bitcoin started 2021 off with a flying, topping $35,000 in the first week. Analysts predict that Bitcoin is far from its max trade value. Those have attracted even more investors to the leading digital asset.
However, the reason one should invest in Bitcoin in 2021 should not be because of its rally in December 2020. The simple reason is that more people benefit from long-holding Bitcoin rather than shorting the asset.
Don’t Invest Because of FOMO
FOMO or the Fear Of Missing Out is a feeling common among inexperienced investors. In investing, FOMO is an anxiety that an exciting or interesting event may currently be happening that will yield nigh-instantaneous rewards.
Many who jump into an investment because of FOMO end up with losses. For example, many who jumped on the bandwagon when Bitcoin approached $34,000 on January 3 were left with losses.
In the next 24 hours, Bitcoin saw a pullback of almost 10 percent. However, the coin now trades at $34,570 after breaking the $35,000 on January 5, 2021. FOMO investments seldom end well.
Why is the World Interested in Bitcoin?
1. Institutional Investors are Jumping In
In 2020 Bitcoin moved from being an imaginary asset to one chased by institutional investors. The number of entities holding a balance equal to or above 1000 BTC reached an all-time high in 2020.
As BTC whales (large holders of BTC) accumulate, the circulating supply of the coin reduces. As a general economic theory, scarcity creates higher demand which is compensated by a geometric rise in price.
This means that over time, it is possible that as Bitcoin approaches its fixed maximum supply of 21 million coins, the price of Bitcoin will continue to go up.
2. Bitcoin is Used as a Hedge Against Inflation
n December 2020, MicroStrategy, a business intelligence and mobile software company announced it had acquired up to $1 billion in BTCs.
The company announced that BTC is being used as a money/savings instrument against the inflation of fiat money.
The CEO of MicroStrategy Inc. Michael J. Saylor announced:
This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.
3. Bitcoin and Cryptocurrencies Trump the Traditional Banking System
One of the earliest successes of digital assets was against the traditional banking system. While banks charge fees to process transactions (even higher for international transfers) digital currencies provided an alternative over the internet with little or no transaction fees.
In addition to eliminating the bottleneck and time involved in international transfers, digital assets could be accessed by everyone. There are around 2.2 billion people with access to the Internet or smartphones without access to a traditional exchange. For these people, the cryptocurrency is perfect.
4. Blockchain is Growing at a Hypergeometric Speed
Given that Bitcoin introduced the world to Blockchain, it is bound to benefit from the growth of the industry. Companies such as Visa, Fidelity, Samsung, IBM, Circle, Walmart, NVIDIA, MasterCard, Tesla, and Square are finding ways to integrate Bitcoin solutions into their products.
Countries and banks are also delving with the United Arab Emirates, China, Australia, Japan, Malta, the Bank of America, and Wells Fargo all with blockchain involvements.
Blockchain is driving the infrastructure of tomorrow, and as it’s use cases increases, so the value of Bitcoin is bound to increase. There are many other reasons why people have invested in Bitcoin, but these are the most standout reasons at the moment.
How to Start Investing in Bitcoin
Now you know why others are investing in Bitcoin, and the correct reason why you should too, the next step would be the actual investment. We have simplified the process of investing for you.
1. Choose A Bitcoin Exchange
There are more than 200 exchanges currently active in the cryto space. Each offers a different type of service. To save you time, we have created a list of the best crypto exchange in different categories they fall into. You can find that by clicking here.
After choosing an exchange, you may want to check for;
- Country Support: Not all exchanges support all the countries of the world. So, one of the important things you should check out in the exchange is full support for your country.
- Exchange Rates: The Bitcoin/USD or BTC/your country’s fiat currency is usually set by the exchange platform. In the end, the combination of the exchange rate and fees determines the final price you’ll pay.a
2. Purchasing the Bitcoins
After settling on an exchange that meets all your requirements, the next step would be purchasing Bitcoins. Before purchasing Bitcoin there are things you should know.
- Payment Methods: Some exchanges accept a wide variety of payment methods, and some accept only wire transfers. Depending on the exchange you choose, make payments accordingly.
- Fees and Chargebacks: For first-time buyers, you should know that there are four types of fees. There are fees for deposits, transactions, withdrawals, and the Bitcoin network. Each fee is different in amount and affects the total Bitcoin you receive.
When have settled on the payment method to use and the applicable fees, proceed to purchase your Bitcoin. Note that there may be a buying limit, depending on the payment method you choose.
Depending on the exchange you chose, the transaction may take anywhere from 10 minutes to 1 hour. When the transaction is complete, the BTC is automatically credited to your exchange wallet.
3. Choose a Bitcoin Wallet
Bitcoins are bought on crypto exchanges but need to be stored inside a Bitcoin wallet. A Bitcoin wallet is a piece of software that helps you manage your Bitcoins.
A Bitcoin wallet is more secure and recommended for Bitcoin holders. They are recommended because they provide a private key, without which your account can’t be accessed. Here’s a list of 20 of the best wallets in 2021.
After creating a Bitcoin wallet, proceed to transfer your Bitcoin from the exchange to the wallet. Then, keep your private key as safely as possible, without it, you can’t access your Bitcoins.
On the Flipside
- This guide can be used to invest in other altcoins – an alternative to Bitcoin. Following up with crypto news is one of the best ways to identify trending altcoins.
- At DailyCoin, we provide top-level news and analysis on Bitcoin, Ethereum, and other altcoins. Disclaimer, no analysis is considered investment advice, just expert opinions.
When is the Best Time to Buy Bitcoins?
This is one of the most asked questions among new Bitcoin Investors. There is no single or perfect answer to this question. The best time for you to buy Bitcoin depends on the reason that you’re buying Bitcoin for.
For individuals looking to short trade Bitcoins (buy at a low price and sell at a much higher price) you will need to get acquainted with general trading as well as Bitcoin trading techniques. This will help you predict the market to know when to buy. However, this isn’t the best method for the asset.
However, if you are a believer and looking to buy Bitcoin for the actual technology, there are two methods for buying Bitcoins.
1. Dollar Cost Averaging (DCA)
DCA means you buy Bitcoins at a fixed amount on a certain date recurrently regardless of the price. This way you are averaging out the fluctuations in the exchange rate.
2. Buying Regardless of the Price
This method is often used by long term holders of the asset. Bitcoin believers would argue that it doesn’t matter at what price you purchase the coins for, what matters is that you do. In the long term, the price will go up and make these differences seem unimportant.
For first time investors, DCA may be the better route to take. DCA will help you get into the process easier. If in the future you decide to change your strategy, you always can.
How To Cash Out Your Bitcoin
It is not enough to know how to buy Bitcoin without learning how to cash out. Like buying Bitcoin, the method of cashing out greatly depends on your country, and the methods that work best for you. These are the top 5 methods of cashing out Bitcoin.
1. Bitcoin Machines BTMs
The most popular way of converting your Bitcoins to cash is using a Bitcoin ATM. It works like conventional ATMs but converts your Bitcoins directly to cash, yes, real cash.
Bitcoin machines would require you to transfer the amount you want to withdraw to a certain wallet. When the transaction has been confirmed (takes around 30 minutes) the machine releases your cash.
This is certainly not the most convenient or fastest means of cashing out your Bitcoin. Also, BTMs are not available in every part of the world.
2. Online service
If you cannot access a Bitcoin ATM in your location, you can search for online crypto services. Coinbase and Binance are the most popular in this category.
Some of these services allow users to directly withdraw funds to bank accounts. Coinbase is available only in the US and certain European nations. Binance has a much broader reach. Run a Google search for such services available in your location.
3. Cryptocurrency cards
Cryptocurrency debit cards are one of the best ways to cash out Bitcoin. These cards connect digital currencies to many accepted payment and withdrawal methods. The equivalent in cash is made available in these wallets which can be withdrawn to your bank.
4. Crypto Wallets
Many new crypto wallets offer a vast variety of services including features to withdraw Bitcoin. Luno allows customers to cash out cryptocurrency directly to bank accounts.
Wallets of this nature, process your withdrawal “automatically”, and transfers to your bank. Your bank takes as long as needed to release your funds. This service is available in many countries.
5. P2P Platforms and Traders
P2P is a growing method of cashing out Bitcoins. These payments allow the transfer of funds between two parties using their individual wallets and Banking accounts.
Regulated P2P platforms would hold both funds in escrow and release them upon confirmation. Selling to a P2P trader would mean instant cash out of your Bitcoin when the transaction is done. However, we recommend only regulated platforms and trusted dealers for this method.
Residents of India can make use of Unicas. Unicas is a physical bank that combines the services of both traditional banking systems with cryptocurrencies. Find more details here.
