Bitcoin holders should not be disappointed in bear markets, especially if they see Bitcoin as a long-term investment. New investors should be clearer: they are at a better starting point than they were in 2021.
Here we will discuss some reasons about whether or not it is worth buying Bitcoin in bear markets.
The year 2021 was a great time for Bitcoin investors. The year started at $30,000 and ended at $47,000 per token. In addition, constant all-time highs were reached, with the most notable ones being on April 14 (62,800), October 20 (66,200) and finally on November 10, when Bitcoin momentarily reached USD 69,000 per coin, according to data from crypto analytics platform Coingecko.
The same cannot be said for 2022. After starting the year at USD 47,000 the falls began for different reasons: a coup in the cryptocurrency nation of Kazakhstan, Russia’s invasion of Ukraine and the Fed’s interest rate hike by 50 basis points led to falls in the Bitcoin price.
Bitcoin chart from 2013 to the present. In 2013 it was trading at $111 per coin.
At the time of writing, Bitcoin is trading at USD 31,300, just slightly higher than it was at the beginning of 2021. According to many analysts, we are on the verge of a cryptowinter, a period of months or even years in which the price of cryptocurrencies falls or remains stagnant.
Now let’s start with the reasons to buy Bitcoin in bear markets.
A limited supply
The Bitcoin protocol may seem very complicated and difficult to understand for most people, but there is one clear rule: there can be no more than 21,000,000 Bitcoins in circulation.
Once that number is reached, no new coins can be created, making the supply scarce. There are currently around 19 million tokens in circulation.
Another reason that Bitcoin in circulation will continue to become scarce over time is halving, which is the halving of the rewards earned by miners. This event occurs every 4 years.
Institutional investors are in.
In 2021 and 2022 the SEC (US Securities and Exchange Commission) approved the creation of index funds backed on Bitcoin and mimicking its price. In this way, many pension funds and mutual funds can be exposed to Bitcoin without necessarily holding coins in storage.
Goldman Sachs, the largest investment bank in the North Country, issued ETFs in Bitcoin for its retail clients. This shows that large institutional investors see Bitcoin as a store of value and a good investment opportunity.
Where to buy cryptocurrencies?
Do you want to keep bitcoin in your portfolio or just as an investment? The first thing you should know is that you can buy fractions or satoshi, you do not have to buy a whole bitcoin. If you want to know how to convert Bitcoin to Monero, click on the link above where you will find a general description of the cryptocurrency and step by step so you can have satoshi in your wallet in less time than you think.
The market favors the patient
Shelby Cullom Davis, an American investor and philanthropist, is known for this phrase: “Almost all money is made in bear markets, but you don’t realize it at the time.” That phrase used to talk about the stock market can also be applied to the crypto market, especially Bitcoin.
And the history of this cryptocurrency proves it: no matter the size of the fall, as the months and years go by, the price of Bitcoin revalues. That’s why we want to end this article with an investment strategy that can help you a lot:
The DCA strategy reduces risk
In Spain there are many cryptoasset investors. It is likely that we all know or have heard of someone who lost money investing in BTC or other cryptos.
That makes many people wary of this cryptocurrency. However, there is a strategy called Dollar-Cost Averaging (or DCA) that is widely used among stock market investors, but has helped many to invest in Bitcoin without risk.
This strategy involves allocating a portion of monthly income to make one cryptocurrency trade per month. By buying Bitcoin 12 times a year you end up averaging the price at which you bought it, minimizing the risk of loss and increasing the chances of winning in the long term, since you are not buying only at the peak of the Bitcoin.