The idea of digital money is not new and is accepted around the globe now. Bitcoins are another form of digital money used like normal currency. They are built with the help of encrypted codes. Bitcoins are the largest cryptocurrency and are quite a risky investment. So when it comes to investing in Bitcoins, expert financial investors suggest investing a small sum which they are okay to lose; otherwise, the loss might give you more pain in the long run.
This is the reason one should possess high-risk tolerance. There are no physical versions of coins, and you don’t need banks for any transactions. Cryptocurrencies are very volatile and risky, and investments are not like a regular stock market. You can lose all your money in Bitcoin.
The Drop-In Bitcoin Prices
In 2022, the price chart of Bitcoin and other cryptocurrencies went massively down. Interest rates and rising inflations have caused the crypto market to fall drastically.
In November 2021, it was seen that the price of one Bitcoin was $69,000. However, according to Coinbase in November 2022, the price of Bitcoin fell drastically to $16,000.
What are the reasons for Bitcoin’s massive dropped prices?
- There has been a huge uncertainty in interest rates around the US and UK. Hence people are not spending on risky assets lately.
- China has made cryptocurrency transactions illegal.
- A sudden surge in inflation has caused a huge rise in the cost of living, due to which investors need more income to invest in bitcoins.
- There has been a collapse in the cryptocurrency exchange FTX. This is the major reason it hugely affects other crypto exchanges.
- Bitcoins and other cryptocurrencies investments have multiple threats of further regulations.
- Another reason for dropped cryptocurrency prices is that Russia has suggested a ban on cryptocurrency mining and trading.
Would The Prices Of Bitcoin Go Back Up?
It’s very hard to say at this stage whether the Bitcoin prices would go back up or not. The performance of the crypto market mainly depends on the opinions of the crypto crowd. Some crypto investors might still have confidence looking at the charts of 2018.
Certainly, no one can guarantee that bitcoin prices will return to the heights seen in November 2021. If you are currently an investor in bitcoin, then you need to hold your breath and be very patient.
Fees When Buying A Bitcoin
As we all know, bitcoin is a pretty risky investment. Before taking all the risks, you also need to pay a big amount of fees. Such as;
- Deposit fees
- Transaction fees
- Withdrawal fees
- Escrow fees
- Trading fees
Here Is Another Piece of Information You Should Need to Know!
Here are some points that every investor should understand before investing in crypto.
Bitcoin Are Irreversible
The worst part of Bitcoin is that the payments lack security; they are anonymous and irreversible. So, if you have made a wrong payment by mistake, keep in mind that it’s final and can’t be reversed. Moreover, all the investors keep their cryptocurrency and Bitcoins in bitcoin wallets. This is risky for them as if they lose access to their private key, they can lose all their investments. Also, if your hard drive catches a virus or crashes, all your Bitcoins are gone within a few minutes.
Limited Use
You can’t use Bitcoin like credit cards and debit cards as it’s still not widely accepted around the globe. Although many known companies are accepting Bitcoin payments, the whole concept is new for the rest of the lot.
No Government Regulations
Like other currencies are supported by proper Central Banks due to which they are not protected legally and fall into scams easily. Being a decentralized currency, there is no guarantee of minimum valuation. This simply means that when a big investor plans to stop using bitcoins, the value of bitcoins would decrease essentially, and others have to suffer.
The Highs and Lows of Bitcoins
It’s been recorded that the Bitcoin market has shown dramatic changes over the last few years. Finance experts have acknowledged that it’s one of the most dangerous creations. So be prepared if you wish to invest your hard-earned money in Bitcoins, as you might end up losing a lot of your money.
A Few Questions One Must Consider Before Investing in Bitcoins:
- Can you take the level of risk?
- Do you know exactly how a crypto bitcoin market works?
Bottom Line
It’s clear that after the downfall of the Bitcoin market in November 2022, there are better times to invest in Bitcoins now. Also, keeping in mind its other negative traits, like they don’t have any government regulations, they have very limited use, and they are irreversible; makes them highly risky to invest.