Should I Buy Bitcoin? Here's why it's not too late to buy Bitcoin
in Bitcoin (BTC)
Even though the BTC price has been exploding higher, it’s not too late to buy Bitcoin. BTC is still only in the beginning stages of a new bull market, suggesting that there are still plenty of gains to be had.
However, before we talk about why Bitcoin is likely to go higher from here, it’s important to cover a few BTC investing basics.
- The Bitcoin price is highly volatile. Bitcoin can quickly go up or down 30% in just a few days. Don’t invest so much money that you feel uncomfortable holding through a big dip.
- Nobody can predict the price of Bitcoin! We can make educated guesses but nobody knows for sure what’s going to happen.
- Do your own research. The more you understand Bitcoin, the more comfortable you will feel investing in it.
- Although we’ll discuss historical trends, just because something has happened in the past doesn’t mean it will happen in the future.
- Don’t keep your Bitcoin on an exchange! Exchanges get hacked all of the time and billions have been lost. Instead, keep your Bitcoin in a non-custodial wallet like Exodus or on a hardware device like a Trezor.
OK! Now that we’ve covered the basics, let’s look at a few reasons why it’s not too late to buy Bitcoin.In this article:
The Four Year Bitcoin Cycle
Bitcoin typically follows a four-year price cycle that goes something like this.
- Year 1 (2018) - Painful bear market where hopes and dreams are dashed
- Year 2 & 3 (2019 & 2020) - Accumulation phase where the Bitcoin price moves around between a range of the old ATH ($1,200) and the new ATH ($20,000)
- Year 4 - (2021) - A bull market that typically ends with a parabolic, blow-off top
So far Bitcoin has followed this cycle like clockwork, which suggests that 2021 is going to be the year of the big bull market. Even if you buy now you can still potentially make a very nice profit as the price appreciates throughout 2021.
Assuming that there is another parabolic move in Bitcoin, the big price appreciation probably won’t get started until mid-2021. We saw this in the last cycle, where Bitcoin went from $1,000 to $20,000 in only about 8 months.
Based on this four-year cycle, how high could the price go? We can look to the investing community for some price predictions.
How High Could the Bitcoin Price Go?
Noted gold investor and Bitcoin skeptic Peter Schiff believes that Bitcoin is a bubble and will eventually go to zero.
Bitcoin trader and investor Qiao Wang, who works for the crypto accountability firm Messari, believes that during the next cycle Bitcoin will top out somewhere between $25,000 and $50,000.
Bitcoin investor Bob Loukas thinks that the next cycle could top out around $200,000. However, Bob is also careful to say that he will follow market conditions closely. He also envisions a scenario where the current bull market in BTC ends at a much lower level, such as $50,000.
Dutch Bitcoin analyst, a minor celebrity in the Bitcoin community, believes that the price of Bitcoin could hit somewhere from $100,000 to $288,000 by December of 2021. This is based on his stock to flow, model, where Plan B looks at the existing supply of Bitcoin and compares it to the new supply of Bitcoin that’s coming into the market from the miners.
A Note on Price Action
As exciting as these prices are it’s also important to keep something in mind… Imagine a hypothetical scenario where BTC makes a run-up to $200,000. In this scenario, it’s doubtful that the price hangs around at $200k for long! It would be a blow-off top followed by a dramatic collapse.
For example, the entire move from $100,000 to $200,000 could happen in less than a month. From $150,000 to $200,000 could happen in just a few days or a week.
An advanced bull market’s speed is important to be prepared for so that you’re ready to take profits. During this period of market hysteria, a few things are likely to happen.
- Exchanges will be going down as they’re overloaded with traffic
- The Bitcoin network will be clogged, just as it was in 2017. To get a transaction cleared quickly you might need to pay $100 or more in transaction fees
- As the price approaches $200,000 people won’t be excited for that level, there will be euphoria because everyone believes Bitcoin is headed to $500,000!
Even though high prices are great, to take advantage of them you have to be prepared. Have a plan for when you will sell and stick to the plan.
If you don’t end up taking any profits during the bull market that’s fine, lots of people don’t. You can be a long term hodler of Bitcoin but just remember, the BTC market cycle takes four years so you might end up waiting a few years to sell at a profit.
Can I buy a fraction of a Bitcoin?
It’s absolutely possible to buy a fraction of a Bitcoin since BTC is divisible down to 8 decimal places. The smallest unit of account for Bitcoin is a Satoshi, which is currently worth only a fraction of a cent.
In fact, this is one of the features that makes Bitcoin superior to gold: divisibility. You can buy $500 million worth of Bitcoin or $50. Bitcoin investing is open to everyone since you can invest whatever amount you’re comfortable with.
Exodus makes it easy to buy Bitcoin on your phone with Apple Pay.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.