What Is A Good Price To Buy Bitcoin
As troubles in the traditional banking sector grow, bitcoin is benefitting, and risk sentiment has turned bullish on the once-beleaguered coin. Starting 2023 at around $16,600, the bitcoin price has risen a dramatic 70% and now sits around $26,969 as of 28 March.
what is a good price to buy bitcoin
One of the primary drivers of the recent rise in bitcoin price is the goldilocks market regime that appears to be developing. Inflation in the US has fallen from a peak of 9.1% in June 2022 to 6.0%, and consequently the Fed has been able to slow its rate hikes. Markets are pricing rate cuts for 2023, and this is bolstering risk assets such as equities and crypto. Crypto has also already priced in a lot of bad news recently, leaving the way open for upside moves.
Before the early 2023 bull run, bitcoin was having a miserable time. This was due to several events, both crypto-specific and part of the broader macro backdrop. You can see the current BTC price on the chart below and its historical progress through 2022.
A significant event to negatively impact the BTC price was the spectacular collapse of crypto exchange FTX. Bitcoin had traded in a tight range between $18,500 and $20,000 during September and October 2022. However, it fell 26% as news of the collapse emerged, and the coin has only just recovered past those levels.
Moreover, there are ongoing fears that the effects of high inflation and rising interest rates will plunge the world into a recession. Our recession probability indicator remains over 70%. Bitcoin is yet to experience a serious global recession, but we expect one would limit any potential upside in price action. This is because during times of economic uncertainty and weak growth, investors may be more inclined to sell risky assets like bitcoin and seek safer investments such as government bonds.
One exercise is to see how low prices could get were the NASDAQ to suffer a 2000-style crash. After all, earlier in 2021, the bitcoin and NASDAQ correlation reached highs of almost 80%. So where the NASDAQ went, bitcoin followed. The correlation has declined recently, but should it rise again, the historical drawdowns of NASDAQ could be informative.
Back in 2000, the NASDAQ suffered a 78% drawdown. As of November 2022, the NASDAQ is in a 27% drawdown. A repeat of the 2000-style drawdown would put the NASDAQ at 3,500. So where would crypto be if NASDAQ were trading at this level? We estimate a regression between bitcoin/ethereum returns and NASDAQ returns from 2020 onwards. Based on this relationship, we find:
We think bitcoin is a worthwhile long-term investment. However, we also note that bitcoin is extremely volatile. That means it experiences large price movements over short periods. Before investing, you must understand the risks involved: you could lose all or a large portion of your investment. Never invest money that you cannot afford to lose.
However, to invest in cryptocurrency, we must first understand it. Crypto tokens are unlike any traditional asset class. And they are all different. Just because you understand bitcoin, does not mean you know how ethereum works. Our video on bitcoin fundamentals can help you understand how bitcoin prices fluctuate and how to assess trends in important bitcoin metrics.
We suggest paying attention to the long-term macro backdrop when asking yourself, should I buy bitcoin right now? Your exposure to bitcoin needs to be appropriately sized so that you can survive 50% to 80% drawdowns. Drawdowns provide good entry levels for exposure, but we would not go max long in an environment of rising central bank rates and falling global growth momentum.
The idea is that when prices are high, you can afford less of the asset. But when prices are low, you can afford more. When the market recovers, you benefit from having bought more shares at the lower price. Please note that using this strategy will not always result in a profit or necessarily protect you from falling prices.
For trading bitcoin over the next two to four weeks, we are slightly bearish. That means we expect falling prices. However, we think bitcoin is a good long-term investment for the next one to three years and are bullish overall. That means we expect prices to rise in the long term.
As with all investments, the value of bitcoin can rise as well as fall. While it is unlikely that bitcoin will suffer a complete loss of value, investors must be prepared to suffer drawdowns of between 50% and 80%. We recommend small allocations and diversification of your portfolio. Never invest what you cannot afford to lose.
Traditional wisdom says you should buy low and sell high. But whether you should sell bitcoin depends on your investment horizon, risk appetite and financial goals. Although some websites speculate that certain days of the week are better or worse than others for selling bitcoin, we believe that any decision to buy or sell should be based on an analysis of crypto fundamentals.
We think some cryptocurrencies like BTC and ETH are a worthwhile long-term investment. However, they are also extremely volatile. That means large price movements over short periods are common. Before investing, you must understand the risks involved: you could lose all or a large portion of your investment. Never invest money that you cannot afford to lose.
Smart contract platforms: after bitcoin, the big innovation was to have blockchains that were more programmable. These could host smart contracts or decentralised applications and have allowed the emergence of the metaverse and defi. Ethereum (ETH) is the most popular version of a smart contract platform. As well as ethereum, we also include some key competitors. The constituents of this index are: Ethereum (ETH), Cardano (ADA), Avalanche (AVAX), Solana (SOL), Fantom (FTM), VeChain (VET), Terra (LUNA), EOS (EOS), and Chainlink (LINK). We also include Polkadot (DOT) which allows interoperability between blockchains and the use of smart contracts via parachains.
Bitcoin (BTC -0.62%) bulls have reason to be nervous. In the span of just a week, the entire investment narrative surrounding Bitcoin seems to have shifted, thanks to the spectacular meltdown of cryptocurrency exchange FTX (FTT -1.25%). On Nov. 9, the price of Bitcoin fell below the $16,000 mark, and it was briefly trading at its lowest price in nearly two years. This after Bitcoin had been trading near the $20,000 level for months. For the year, Bitcoin is still down 65%.
The first major catalyst, of course, is a brightening outlook for the U.S. economy. When Consumer Price Index (CPI) numbers came out just days after the FTX collapse, they provided an immediate boost for Bitcoin. The inflation rate, which had been 8.2% in September, cooled off to just 7.7% in October. On news that inflation appears to be declining, the price of Bitcoin immediately spiked from $16,500 to $17,500.
All the Federal Reserve tightening we've seen in 2022 appears to be working. The hope among Bitcoin bulls is that the Fed will soon decide to stop increasing rates so aggressively. If the Fed gets inflation under control, Bitcoin investors will breathe a huge sigh of relief. If the Fed stops raising rates, say traders, the price of Bitcoin could go as high as $21,344 by the end of 2022.
This is about much more than just "buying the dip." This is about buying a cryptocurrency with strong long-term fundamentals. At a price of about $17,000, Bitcoin appears to be significantly undervalued. Just days before the FTX collapse, Bitcoin was trading above $21,000. This price is more indicative of Bitcoin's true valuation than the current price in the marketplace, which seems to reflect much of the fear-driven panic selling that occurred over the past week.
While crypto is starting to trend upward, volatile highs and lows are nothing new in the crypto markets -- and skeptics have long characterized crypto as an empty bubble destined to burst. Critics have called bitcoin, stablecoins and NFTs simply a new digital version of an old con primed to swindle and scam. But investors see the world of digital coinage as a step forward, a kind of "Money 2.0" that will democratize finance and power the metaverse. Amid the seesawing prices and teetering sentiments, one thing hasn't changed: Cryptocurrency remains controversial, risky and wildly volatile.
In simple terms, cryptocurrency is a digital token, ownership of which is recorded on a blockchain, a distributed software ledger that no one controls. This is designed to make it more secure, in theory. bitcoin and ethereum are the two most widely known cryptocurrencies, but more than 18,000 tokens are traded under different names (dogecoin is one famous example).
Despite gyrating prices and a relative lack of regulation, cryptocurrency is seen by many as the next financial frontier. Developments like President Joe Biden's desire to explore a digital US dollar to multimillion-dollar Super Bowl ads underscore a growing desire from powerful government and corporate institutions to quickly legitimize crypto in much the same way as stocks and bonds.
You should be on the lookout for crypto scams. One often-used scheme is a pump and dump, in which scammers encourage people to buy a certain token, causing its value to rise. When it does, the scammers sell out, often pushing the price down for everyone else. These scams are prominent, and they took in more than $2.8 billion in crypto in 2021.
Whether you're using Coinbase, Binance, Venmo or PayPal, you'll be required to provide some sensitive personal and financial information... including an official form of identification. (So much for bitcoin's reputation for anonymous transactions.)
The cryptocurrency's price has plummeted to $32,000 per coin amid a wider stock market selloff. That's a more than 50% dive from bitcoin's high of above $68,000 per coin in November, according to data from CoinMarketCap.
Bitcoin is no stranger to price volatility, evidenced by the fact that just last week, it climbed to $40,000 before falling. Back in 2017, its price hit a high of $20,000 before crashing to below $5,000 the next year. In 2021, its price fell to below $30,000 before surging to November's record high, and seeing a 10% drop in a day is not uncommon for investors with their money in bitcoin and other cryptos, like ether or dogecoin. 041b061a72