The most recent craze in the financial world is undoubtedly Bitcoin. This virtual currency has been praised by people who believe in the concept. Other critics mainly see Bitcoin as a bubble without any real value. But what are Bitcoins actually? And where can you best invest in Bitcoins?
How can you best invest in Bitcoins?
When you invest or speculate on the price of Bitcoins, you naturally want to achieve the best result. For this, it is important to apply a good strategy. First, it is important to understand that Bitcoin is very news sensitive. Negative news can directly influence the price very negatively and vice versa. When a large party is hacked, the price can immediately collapse. If a bank indicates that it will support cryptocurrencies, this can actually push the price up. If you want to take maximum advantage of investing in Bitcoin such as ‘Yvonne Catterfeld Bitcoin’, it is, therefore, wise to take these movements as much as possible. Be sure to go short on Bitcoin when you expect a drop. When things go badly with Bitcoin, it can drop dramatically. Remember that every percent drop can be a percent gain for you the right way! If you want to buy Bitcoin for the long term, it is important to time it well. The Bitcoin price often moves in waves. The hype comes back to life when mostly positive news comes out. The trick is to buy Bitcoins when the price has plummeted. That way you have the most space to make a nice profit! Investing in Bitcoins is only suitable for the investor with nerves of steel. Do not expect the price to just go up. Set realistic goals and make a plan. That way you increase the chance of success!
What exactly are Bitcoins?
Bitcoin was first introduced in 2008 as a form of virtual currency that was issued without the involvement of Central Banks. The financial crises of the past period have led to a sharp decline in confidence in the banking sector. As a result, investing in Bitcoin was seen by many people as an attractive way to generate income without the intervention of traditional banks. Bitcoins can be mined by discovering specific numbers of 64 digits using an algorithm (a Bitcoin number is somewhat similar to a prime number). When someone has discovered a Bitcoin number, it can be traded. If someone is unable to discover a Bitcoin themselves, they now have the option to purchase Bitcoins or parts of Bitcoins that are offered for sale online. Bitcoin has gained a lot of popularity in recent years. People who bought Bitcoins in the early days made huge profits. It is therefore not surprising that many people are still interested in trading Bitcoins.
Risks of investing in Bitcoins
However, there are also risks. Central Banks, including the Nederlandsche Bank, warn against the risks. The Bitcoin exchange rate is very unstable. The volatility can ensure that you achieve a high return. If you’re not careful, the high volatility can also cause you to lose a hefty amount. Another risk of Bitcoins is the fact that the Bitcoin deposit guarantee scheme does not apply. This is because there is no central issuer of Bitcoin that can be held liable. There are also a number of legal questions. The anonymity of Bitcoin makes it interesting to use the currency in malicious transactions and to finance illegal activities. So it is important to be aware of the risks when you are going to invest in Bitcoin. You can lose your entire investment. There is also the risk that you will be robbed when physically buying Bitcoins.
Timing when investing in bitcoins
Timing is very important when you start investing in bitcoins: this is because the price of the cryptocurrency can fluctuate significantly. If you had invested € 100 in bitcoin in 2020, you would have had assets of almost € 500 million by the beginning of 2021! However, if you step in at the top, you can also lose a large part of your investment. People who invested € 100 at the peak of 2017 had only € 34 at the end of 2018. The problem with timing is that this is very difficult: few people manage to predict the market properly. It may therefore be smart to apply dollar-cost averaging. You then periodically buy up bitcoins, so that you buy at both the depths and the highs. Of course, you can adjust the strategy a bit to the situation: when the price has dropped considerably, you can buy extra and when the price has risen sharply you can even sell some bitcoins.
How can you trade bitcoin safely?
You read a lot of negative experiences about bitcoin on the internet. Precisely because bitcoin is so popular, you see that many people are being scammed. In the hope of getting rich, people buy bitcoins or other crypto coins from an unreliable party. Therefore, make sure that you buy the bitcoins from a reliable party such as Bitvavo In addition, avoid scams and do not accept offers that seem too good to be true. There is no unique formula when it comes to bitcoin investments. You can certainly get a high return with bitcoin investments, but there is also the chance that you will lose a large part of your money. Therefore, only invest in crypto coins with money that you can really afford to lose.