Should You Buy Bitcoin While It’s Still Under $20,000?
To say crypto has had a rough year would be the understatement of the century.
This year has been setback after setback for the crypto world. Prices have been consistently declining since the end of 2021, and Terra Luna explosion earlier this year had many questioning the future of crypto. Now, after the FTX implosion, investors are even more skeptical.
If you are hesitant to invest in cryptocurrency right now, it is reasonable. Even some of the experts are rattled by the events of the past year.
But with crypto prices at historic lows, it could also be an extraordinary buying opportunity. Then it is the right time to invest Bitcoin (BTC 5.35%)? Here’s what you need to know.
Is crypto safe right now?
Crypto is an inherently risky investment and always has been. It is still speculative right now, so there are no guarantees that it will thrive in the long term.
If you’re thinking about investing in Bitcoin – or any other cryptocurrency – make sure you have a higher tolerance for risk. Only invest money you can realistically afford to lose, and double check that the rest of your portfolio is well diversified to limit your risk.
While events like the FTX meltdown can be unnerving, remember that these types of events don’t necessarily make crypto riskier. FTX wasn’t so much a crypto problem as it was a corporate executive making bad decisions, and that can happen in any industry (take Therano’s downfall, for example).
There will always be some degree of risk with crypto, and not all investors will be comfortable with it – especially in the wake of the FTX scandal. But if prices rise a bit, you could potentially make a lot of money.
Will Bitcoin bounce back from this decline?
To be clear, no one knows what the future holds for crypto. But Bitcoin is in a better position than many other cryptocurrencies simply because it is the largest and most popular in the industry.
Bitcoin currently has a market capitalization of around $318 billion – making up more than a third of the $822 billion crypto market as a whole. Its sheer size gives it a huge advantage, and if there’s any cryptocurrency to hold up over time, it’s more likely to be Bitcoin.
It is also more popular among large institutional investors. As more investors become skeptical of smaller altcoins, those who stay with crypto may feel safer parking their money with a giant like Bitcoin. Institutional investors are a big part of the reason Bitcoin hasn’t been hit as hard as some other cryptos, and they may also be the key to long-term growth.
However, Bitcoin has its flaws. Energy consumption and slow transaction times still hold it back, for example, and whether it will be a strong hedge against inflation is debatable. Bitcoin is not perfect and it is important to understand these risks before buying.
That said, Bitcoin’s price is the lowest it has been in years. It is currently priced at around $16,500 per token, down from an all-time high of nearly $70,000 per token last year. If you’ve been waiting for a more affordable time to invest in crypto, now may be your best chance.
Should you invest now?
No one – even the experts – can say exactly how crypto will fare in the next few years. There is always a chance that your investment will not pan out and you could lose money.
However, there is also a chance that the potential rewards outweigh the risks. If you had invested $1,000 in Bitcoin five years ago, you would have more than $2,100 right now. In other words, despite all the difficulties crypto has been through (and the fact that Bitcoin is currently down over 75% from its peak), you can still would have more than doubled your money.
Again, there are no guarantees that Bitcoin will thrive over time. But if the price pulls back—even if it doesn’t surpass the all-time high anytime soon—you could stand to make a lot of money by investing now.