When Is The Right Time To Invest In Digital Currencies 

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When Is The Right Time To Invest In Digital Currencies

KEYWORD PHRASES – invest in digital currencies 

digital currencies

Cryptocurrencies or digital currencies have captured the attention of reporters and millions of investors recently. Of all the available virtual currencies, bitcoin and ethereum have been gaining wide popularity. This is due to the safe and decentralised features of the blockchain technology that drives them. While ethereum is new on the block, bitcoin is the first of the virtual currencies to emerge and become an actual form of money that people accept.  

In recent times, bitcoin has gained widespread attention because of the ever increasing prices. Currently, bitcoin recorded an all-time high of USD 6,300 or SGD 8,600, higher than the USD 4,000 mark that was reported a few months back. While the currency is attracting potential investors, the rising prices have left enthusiasts wondering about the right time to invest in digital currency.  

On one side the increasing prices signify that today is the right time to invest in bitcoin, on the other hand, it makes it impossible to identify an accurate time. Although anyone can invest any time in a digital currency or bitcoin, understanding cryptocurrencies like bitcoin in consideration with your financial goals can help you buy them at the right time.  

 

Comprehending Digital Currency 

With bitcoin being the most popular one, understanding the reasons behind it along with its price index can be helpful in deciding when or whether or not to buy them.  

Bitcoin is Still Emerging 

The world is being digitised. Right from individuals to businesses, everyone is relying on the internet and technology. Thus, it only makes sense for bitcoin to claim the interest of investors around the globe. Although the currency emerged in 2009, it’s still at an infant stage. While several nations have embraced it, there are many countries still to accept the currency. The currency is also expected to be used in everyday transactions and not only as a speculative tool. This opens up bitcoin to wide usage opportunities and a huge number of customers.  

It is Scarce and Has Several Benefits 

Like gold, bitcoins are scarce. 21 million is the bar on bitcoin release and no more than that can be released over 100 years. This feature acts as an advantage as well as a disadvantage for currency holders. While the fixed supply is known to alleviate adverse consequences like hoarding, many investors are suspicious of what would happen when the 21 million count is struck. In spite of the fixed supply, the currency promises a sound monetary policy that can be verified by anyone.

Working on a decentralised technology like blockchain, the currency can be transacted in by anyone from anywhere. Plus, anyone can see how many bitcoins are created and are in circulation. Since there is no entity regulating the currency flow, transactions cannot be blocked. The transparent and decentralised features make it secure and may also provide users a way to escape any failures in government regulated monetary policies.  

 

 coindesk.com 

Bitcoin is Highly Unstable  

There is no denying that bitcoin is highly volatile. This is clear from its history and the recent price highs. The currency’s history shows two trends – either the price is falling gradually or rising rapidly. Of course, history cannot guarantee the future scenario, but one can surely decipher that volatility is the core of digital currencies, especially bitcoin. While some see this as an opportunity, for those who fail to understand the currency, this feature could be a risk.  

Why Do You Want to Invest in Cryptocurrencies 

While the above-mentioned factors surrounding bitcoin may have posed various opportunities and triggered you to buy them, you must be clear about your goals before investing in them. Ask yourself why do you want to buy bitcoins? Do you want to make quick money or are you interest in it because of the technology? Also, ask whether or not you have sufficient money to invest and also lose in case of unfavourable market conditions.  

Most investors enter the bitcoin league just because of its rising price trends and to make quick money. But, they overlook the volatile nature of the currency and end up losing in the process. It is highly recommend to understand the technology and the currency in depth, before jumping on to buy a huge portion of the currency. Again, those willing to gain in-depth knowledge of the technology and the economic and political ramifications surrounding it are the best candidates for bitcoins. Such people will start with caution and will be in a better position to handle the violent price swings. Know your goals and understand your financial health to answer whether or not or when you should invest in bitcoin.  

How and When to Invest in Cryptocurrencies 

Seeing the current trends, it would have been an accurate time to invest in the currency at USD 100. But, that is unlikely to happen. And even if it does, the price is likely to rebound as quickly as it falls. If you decide to invest in bitcoins, one strategy that you can use is dollar cost averaging. This strategy allows you to invest small amounts of money at certain time intervals to lessen your exposure to effects of price shifts. Also, devise your exit and contingency strategy to beware of huge losses. While some base exit strategies on major technical hiccups, others do so on price trends. Devising an investment plan and sticking to it is the best way to trade bitcoins.  

There is no one right time to buy bitcoins. Following the markets, news and the technology. Governing these digital currencies can possibly help you figure out the best time to buy them. 

One cannot deny that cryptocurrencies are here to stay, especially bitcoin and ethereum. Plus, experts estimate that innovation will bring about more potential winners on the block. If you are keen to invest, make sure you understand these currencies thoroughly or take a financial consultant’s help to prevent adverse consequences.  

 

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