The Ultimate Bitcoin Investment Strategy

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bitcoin investment strategy

Investing in Bitcoin is a strategical decision that comes with it’s own set of risks and rewards. People who are uncertain about the nature of Bitcoin may be reluctant to invest in it – however, Bitcoin has seen an increase in median price over the recent years and shows potential for the future. The majority of investments made through Bitcoin are from venture capitalists who are trying to cash in on their foresight.

Why is Bitcoin a Viable Investment?

In 1999 China was on the verge of an industrial boom, and companies that correctly predicted this trend and got in early were rewarded with expanding profits. Bitcoin faces a similar scenario with it’s early stages of development, although it is widely acknowledged that the currency does not yet have the same convenience as traditional currency. However, with the rapid development of ASIC’s and other technology geared towards mining and distributing Bitcoin, we should expect to see more users build awareness of how to use the currency.

Have a Plan

Investors who wish to enter into Bitcoin should always know how they plan to make money: will the profit margins be sufficient for their portfolio? Day-trading with Bitcoin will yield different results objectively compared to attempting to build a retirement fund with a Bitcoin portfolio. Since the price of Bitcoin can fluctuate heavily depending on market demand, setting a clear goal with tangible values will help investors decide when to stay in the game and when to cash out. Having a plan therefore is highly advantageous and should be the first step in any Bitcoin strategy plan.

Be Prepared for Price Drops

It’s not uncommon to see price drops in Bitcoin. Ideally, we should be able to identify the reason behind it: the Bitcoin is an unconventional currency that only a handful of businesses (mostly online) accept as payment. This makes standard regulation policy inapplicable, and different countries may decide that they will not support Bitcoin. For example, the Indonesian Central Bank has warned it’s citizens that while Bitcoin is legal, the use of the currency to pay for goods infringed upon several of the country laws. Bitcoin is also susceptible to bad news and rumors – since the price is so closely linked to the demand, any negativity may have an impact in the overall worth of the Bitcoin.

Institutional Investors are Profiting

The Gloibal Advisors Bitcoin Investment Fund is one such example of how experienced commodity traders such as Daniel Masters believes that Bitcoin is similar to that of the trend of oil in 1999. The oil tycoon believes that the price of Bitcoin will increase by 3000% over the next five years. Considering that investors made a return of 91.4% on their returns over five years from their initial $350 million round, the results seem to support an upward trend. One possible barrier that makes high-level investment trickier is that amount of financial regulation that markets impose upon transfering large amounts of money into Bitcoin. American investors will, for example, have to find companies that can provide them with the same administration and services for Bitcoin under a SEC Regulation exemption.

Related: How to Invest in Bitcoin Stock

Bitcoin Has the Potential to Challenge Traditional Currency

If Bitcoin proves to be even mildly successful with it’s distribution in the near future, the way people become paid for their efforts could change dramatically. Although the majority of investors still believe that the best bet is though a “cautious adoption” of Bitcoin, there are several features that Bitcoin has that can be more effective than traditional currency that make it desirable. For one, storing digital currency means that fees and regulations applied to traditional currency do not necessarily apply to transactions. Secondly, the nature of the Bitcoin makes transactions instantaneous, allowing for significantly reduced delays on cash flows. Alternatively, the fact that the currency is virtual means that there will be security issues that must be taken into account. While a traditional bank may be able to monitor and shut down a credit card that has been used with unauthorized access, there is no one to manage the funds of an individual who decides to store their personal keys without sharing it with anyone.

Novelty Value is Added With Bitcoin

One of the best ways to take this currency and turn it into something that provides extra value for  business is to add Bitcoin. Since the cryptocurrency is still considered somewhat of a novelty, businesses such as the New York City Bar EVR gained a lot of press attention for being the first NYC bar to accept Bitcoins.

As more industries and services begin to acknowledge Bitcoin as a tradeable, reliable currency, the price will stabilize and go up in value. Investing into companies that take a risk is a risk of itself, but the reward potential is extremely high.

Bitcoin Can Be Mined

Profits are accessible to those who start up their own mining business. The main considerations are investing in the equipment and electricity costs, as well as staff and maintenance. Since there is a wide variety of machinery available to mine Bitcions, it’s possible to generate a large income with a decent amount of investment. There are several companies who are switching to Bitcoin mining, and although the majority of the mare not publicly listed, those that decide to invest in Bitcoin usually see stock prices increase. Should an investor decide to get serious about operating with Bitcoin, the best strategy would be to find a location where maintenance costs can be mitigated, such as places with sustainable, renewable energy.

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