Investing

Is This a Good Time to Invest in Cryptocurrency?

Rewind to the winter of 2015, and you could get your hands on a single bitcoin for around $250. Fast forward to today, and a BTC will set you back in the region of $6,700. 

And don’t forget, the value of bitcoin in the golden period at the tail end of 2017 touched $14,500. Has there ever been an asset whose value has increased by more than 200% in such a short space of time?

When you look at the numbers, you might conclude that bitcoin – and the whole cryptocurrency market for that matter, which has been dragged along by the exploits of BTC – is a fantastic investment if you are looking to make some ‘passive’ income.

However, when you apply a microscope to the crypto market, it is easy to see that all that glitters isn’t always golden.

So is now a good time to invest in cryptocurrency? Like any instrument, there will always be a level of uncertainty. And especially so in the early part of 2020, where the coronavirus has brought stock exchanges and indices around the world to their knees.

Hundreds and millions of dollars wiped off the value of major stocks and currencies in just a matter of weeks. As ever, all investments have to be made with caution.

The Wonder Years

The best of times for the crypto market came as 2017 turned into 2018, where the bull market gained momentum and looked to be unstoppable. 

Bitcoin reached its all-time high, and most of the other major competing crypto coins – such as Ethereum and Ripple – were also taken along for the ride. 

Such market positivity created a buzz about crypto, and new coins and ‘ICOs’ – Initial Coin Offerings – sprung up all over the place. The golden years for digital currencies were upon us.

But then….well, nothing. A host of regulatory issues, including the banning of crypto trading in one of the world’s major markets over in China, took the steam out of the market as investors looked to sell up and maximize their position. 

There was a rally in the summer of 2019 with BTC hitting $9,300, but that was a momentary high and not one that powered the entire market, with other coins remaining in the doldrums.

On February 23, 2020, Bitcoin was valued at a shade under $7,700. On February 28, 2020, Bitcoin was valued at a shade under $6,800.

In less than a week, approximately 10% had been wiped off the value of the crypto market, in a move that mirrored that of the NASDAQ and the FTSE 100. That was the worst week for the markets since the financial meltdown of 2008.

Tracing a Recovery

Buy low, sell high. That’s the old adage in financial investing, and the same principle applies to cryptocurrencies too. 

In the wake of the global coronavirus outbreak, digital currencies have reached lows that have rarely been seen before, but this is surely only a temporary trough – once the virus is brought under control, recovery is (almost) inevitable.

In the midst of this COVID-19 epidemic, it is well worth keeping an eye on the latest Ethereum price and seeing how other leading altcoins like Ripple and Tron are performing. 

There’s a significant event happening in May too with the ‘halving’, which will cut the amount of reward that miners get for their bitcoin. That means that supply to the market will be slashed – and that shift in the supply and demand curve should push the price of BTC up.

Often, but not always, the crypto market comes along for the ride when bitcoin is in bloom, and so perhaps now is the perfect time to invest.

It’s important to also bear in mind the risks of such investments, but with investors eyeing that May halving, there’s every chance that the only way is up for the crypto market from here.

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