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Bitcoin was originally envisioned as a technology for payments, but today most people consider it to be an investment asset—something to save in a Bitcoin IRA
Bitcoin was created as a payment technology, but it is now widely viewed as an investment asset, like a stock or bond.
People add alternative assets, like Bitcoin, to their portfolios for several reasons. Some see Bitcoin and other cryptocurrencies as a hedge against inflation, while others add them to their portfolios to increase diversification. Bitcoin has also experienced astronomical growth compared to recent gains on major stock market indices, making it an attractive alternative.
Historical price of Bitcoin
Compared to blue chip stocks like Pfizer, Nike, or Nestle, Bitcoin is quite young. It was launched in 2009, and its price has skyrocketed.
In 2010, Laszlo Hanyecz, a software developer and an early believer in Bitcoin’s value, famously paid 10,000 Bitcoins for pizza. Today, those coins would be worth over $580 million.
Since then, Bitcoin’s price has continued to climb. At the beginning of 2024, its price was $44,187. By March 2024, its price reached its highest level ever, surpassing $73,079.
“The potential benefits of investing in crypto are potentially higher returns than a more traditional stock and bond portfolio may yield on its own,” said Drew Feutz, a certified financial planner (CFP) with Migration Wealth Management.
However, Bitcoin often experiences price fluctuations and dips. As of September 2024, its price had dropped to about $58,000.
What factors impact the price of Bitcoin?
Bitcoin’s prices rise and fall for a variety of reasons. While the price of stocks can fluctuate based on company performance or industry news, Bitcoin is affected by other factors:
How to invest in Bitcoin
There are several ways to invest in Bitcoin.
Buy Bitcoin directly through a cryptocurrency exchange
Buying Bitcoin directly is one of the most popular ways to invest in cryptocurrency. You can buy Bitcoin by opening an account with a cryptocurrency exchange. You can sync the account with your bank account and use your money to buy Bitcoin.
Invest in a Bitcoin IRA
Another way to invest in Bitcoin is to open a Bitcoin IRA. A Bitcoin IRA is a tax-advantaged retirement account that allows you to invest in Bitcoin and other cryptocurrencies. Bitcoin IRAs have the same tax benefits and contribution limits as traditional or Roth IRAs, but you can invest in alternative assets.
Consider cryptocurrency ETFs
A relatively new way to invest in Bitcoin is through a crypto exchange-traded fund (ETF). With these ETFs, you don’t directly own Bitcoin, but the performance of the ETF will reflect Bitcoin’s performance.
Crypto ETFs allow you to buy and sell shares through an investment brokerage account, without the need to worry about storage for cryptocurrency or opening a separate cryptocurrency exchange account.
Invest in cryptocurrency-related stocks
For those wary of investing directly in Bitcoin, another option is to invest in cryptocurrency-focused stocks. Potential options include publicly traded cryptocurrency exchanges, technology firms, and payment processors; these companies may use Bitcoin or use it in their operations, so you’ll indirectly benefit from Bitcoin’s performance.
Is it a good time to invest in Bitcoin?
Bitcoin’s track record has been impressive, and its adoption by companies as a payment method is growing. As Bitcoin matures, it may experience less price volatility in the future.
“Bitcoin’s price volatility is steadily decreasing over the years,” said Brady Swenson, co-founder and head of product marketing at Swan Bitcoin. “As a far more liquid asset, its price volatility is lower than relatively illiquid cryptos.”
For those with a long-term investment strategy, Bitcoin could be a worthwhile consideration.
“It’s always a good time to invest in Bitcoin with a long-time horizon, [such as] 10 or more years,” said Swenson. “Cryptos are for gambling, not investing.”
Current cryptocurrency prices
Bitcoin may be the most well-known cryptocurrency, but it’s not the only investment option you have. In fact, there are thousands of cryptocurrencies available, but most are even more volatile than Bitcoin. When deciding where to invest your money, consider these alternatives:
The takeaway
Despite some severe dips, Bitcoin’s performance has been impressive. Over the past 15 years, Bitcoin’s price has skyrocketed and, as companies adapt to the technology and it’s a more commonly accepted payment method, there’s the potential for even more growth.
However, cryptocurrencies like Bitcoin can be volatile and risky. Since Bitcoin is so new, it’s hard to gauge how it will truly perform over the long term. Only invest what you don’t need in the short term and diversify your portfolio so that the performance of your other investments can reduce the impact of Bitcoin’s price fluctuations.
“[I suggest] keeping their crypto position to 5% or less of
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.
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