The cryptocurrency market is characterized by high volatility and risk for investors. Failure to understand the pricing of digital assets will result in loss of funds. For example, in April 2021, BTC reached the $64,000 mark but lost 50% by the summer. This volatility is due to the processes in the global economy and the policies of states towards cryptocurrency. Before deciding whether to buy bitcoin now in 2024 or not, you need to assess the current situation in the market.
The value of coins depends on the trust of users. BTC is not backed by real assets, quotes fall after every negative statement of world leaders, big business owners or investors in relation to the cryptocurrency.
Before buying, you need to:
- Determine the nature – is it a long-term investment or a tool for trading.
- To think through the actions in case of a sharp collapse of the rate.
- Determine the levels of fixing the loss and profit.
- To remember that one should not make rash decisions in abnormal situations.
What provoked the growth of BTC
In April 2021, the rate exceeded $60,000 for the first time. However, a number of events caused a gradual decline in quotations, which was observed for the next 3 months.
Against the background of the Chinese government’s ban on cryptocurrency mining, the bitcoin rate fell below the $30,000 mark: more than 2 times compared to the historical maximum. The Chinese authorities oppose companies working with digital currency.
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At the end of July, there was a sharp jump in the rate of bitcoin and some altcoins. The price of BTC exceeded $40,000, which is 15% higher than the quotes of the previous day. The prerequisite for the currency rally was the news that Amazon is looking for a leading blockchain and virtual currency manager. The information gave analysts a reason to draw positive conclusions, and the cryptocurrency market reacted with a sharp rise.
Jeff Bezos, the owner of the company, denied rumors about the launch of his own token. At the same time, he did not give up studying the assets. Against the background of new information, the rate fell again. A day later, the price of BTC fell by 10% from the July maximum and amounted to $37,800.
The main factors that affect the price:
| Reasons | Comments |
|---|---|
| News |
|
| Fear | Panic can reduce the rate of the asset, this is used by speculators. |
| Correlation | There is a connection between tokens, a change in the price of one cryptocurrency affects the value of another. |
| Technology | The introduction of blockchain in the processes of real business and new developments are positively reflected in the quotations of cryptocurrencies. |
| Problems | Attacks by hackers, hacking of exchanges or wallets are reflected in the price of tokens. |
Dynamics and graph of the rate for the entire history
To conclude that today it is too late to buy bitcoin or it is still possible to invest, it is necessary to study the price change throughout history. Analyze the information, factors affecting changes in value.
Expert opinions and forecasts for the future
Predicting the price, giving recommendations about investing in digital assets is a thankless job. The opinions of experts may differ. BTC is unstable, quotes depend on different factors.
You can take the forecasts of experts in 2020 and evaluate them, having an idea of the current situation.
The team of the cryptocurrency exchange Garantex predicted the growth of the asset in 2021 with a peak value for the fall-winter at least $35,000. At the time of writing the review, this opinion looks the most accurate.
Representatives of U.S. Citibank called amounts of more than $300,000. As of July 2021, such forecasts look unfulfilled.
Bitcoin price forecast published in 2020:
| Mike Novogratz | November 2020 | $65 000 | – |
| Philip Swift | November 2020 | $22 000 | Within a few weeks |
| Citi | November 2020 | $318 000 | December 2021 |
| Ray Dalio | November 2020 | Destroyed by the government | – |
| PlanB | November 2020 | $100 000 | End of 2021 |
| Winklevoss brothers | October 2020 | $500 000 | – |
| JP Morgan | October 2020 | $26 000 – $39 000 | – |
| Bloomberg Intelligence | October 2020 | $100 000 | 2025 |
| Peter Schiff | October 2020 | Bitcoin is a bubble | – |
| PlanB (S2F Model) | September 2020 | $288 000 | After Halving 2024 |
| Anthony Pompliano | August 2020 | $400 000 | In the long term |
| Anthony Pompliano | August 2020 | $100 000 | End 2021 |
| Max Keiser | July 2020 | $100 000 | – |
| Panxora (Gavin Smith) | July 2020 | $7 000 | End 2020 |
| Bloomberg Intelligence | June 2020 | $20 000 | 2020 |
| Adam Back | June 2020 | $300 000 | 2025 |
| Robert Kiyosaki | May 2020 | $75 000 | 2023 |
| Tim Draper | April 2020 | $250 000 | Beginning 2023 |
| Mike Novogratz | April 2020 | $20 000 | 2020 |
| Sonny Singh | January 2020 | $20 000 | 2020 |
New gold
Current assumptions about the future of the token are less optimistic. If in January (before the historical maximum) experts called bitcoin “new gold”, now the opinion is more cautious.
Citibank manager Tom Fitzpatrick was the most confident in the growth of BTC. He predicted a rate of over $300,000 already by December 2021. Most likely, the opinion will not be confirmed.
Analysts note the complexity of forecasts on the rate. The strong volatility, dependence on various processes taking place in the world is influenced:
- Prohibition of mining in China.
- Strengthening of control over cryptocurrency in a number of countries.
- Statements by Bezos, Musk, other personalities.
- Demand from traders, investors.
Risks
Bitcoin is actively used for the second decade. During this period, the main risks of investing in digital assets have been outlined:
- Growing control from the states – governments of countries strengthen legislation, including tax legislation, in relation to cryptocurrency.
- Decreasing liquidity – amid sharp rate hikes, large investors have turned their attention to other tokens, putting bitcoin aside until better times.
- More than half of BTC is owned by a minority of the community. If a large pool of assets moves, there will be a sharp price collapse.
- Technologically, bitcoin is lagging behind new tokens. There is an overload in the blockchain network – the speed of transactions falls, the cost of transactions rises.
- Altcoins are growing in value, competing with bitcoin.
Financial regulators of the world countries are striving to take control of the cryptocurrency market. Different scenarios are being prepared:
- Implementing a customer identification policy (KYC).
- Creation of their own digital currencies (CBDC).
The PRC authorities are conducting a serious campaign against virtual assets. Mining has been banned, also cryptocurrency cannot be accepted as payment for goods or services.
Is it worth buying Bitcoin now
Despite the risks, blockchain technology is evolving, embedding itself in the real economy. Interest in cryptocurrency is not waning. It makes sense to buy bitcoin now, in 2024, or wait for more, it is up to the user to decide. In this case, it is worth taking into account the nuances.
Arguments “for”
The main cryptocurrency continues to attract investors, despite price rallies, increasing attention from the central banks of states. The main arguments “for”:
- Experts’ statements about the role of the new “digital gold” provide great support for bitcoin.
- High popularity.
- Maximum rate among other coins.
- High capitalization.
- Almost complete absence of inflation risks, despite high volatility – bitcoin will not depreciate to a minimum level.
Arguments “against”
Weaknesses make you think seriously before investing:
- Sharp spikes in the bitcoin exchange rate bring large losses to the investor.
- The price is affected by careless or intentional statements of influential persons in social networks, media.
- High commissions when withdrawing assets outside the exchange.
- The risk of being left without investment in case the financial regulator decides to ban cryptocurrency or changes in legislation.
- Lack of a clear legal definition in most countries of the world.
Alternative to Bitcoin
In the world of digital assets, it is customary to separate BTC and the rest of the coins, which are called altcoins. Some of them are variations of the first token, the result of a hardfork. Developers take the bitcoin code and improve it.
In parallel with the family of BTC and its forks, other cryptocurrencies appeared, which were characterized by high transaction speed, confirmation method(PoS, PoW) and so on.
When choosing between Bitcoin and altcoins, there is a rule – the lower the correlation between two tokens, the better.
Which coin is displacing Bitcoin
The capitalization of the first cryptocurrency is about 40% of the combined value of all other tokens. These are serious numbers that show that it will be difficult to displace Bitcoin from the digital asset market. The next token in terms of capitalization is Ethereum (four times less than BTC).
Traditionally, it is ethereum that is called a replacement for bitcoin. However, other cryptocurrencies are not inferior. According to various experts and analysts, they could be:
- Dogecoin.
- Ethereum Classic.
- Bitcoin Cash.
- Binance Coin.
- Stellar.
- Polkadot.
- Cardano.
- Ripple.
The world of cryptocurrencies is volatile, quotations are influenced by very diverse factors. An interesting token for investment may lose half of its price in a month. And vice versa, an unknown outsider will rapidly break into the top 10 in a day.
Frequently Asked Questions
🤔 When is the best time to buy bitcoin?
Experts recommend buying when the price falls by 80-90% of the maximum. There are no clear criteria, everyone determines for themselves the point of entry into the market.
😱 Will bitcoin be able to rise above $60 thousand again this year?
Many factors affect the value of cryptocurrency, growth is expected, but its limits are unknown.
✅ Is it profitable to buy or sell BTC now?
It all depends on the purchase price of the asset. If bitcoin was purchased at a high price, it is not profitable to sell it now. It is necessary to determine for yourself the level of profit and loss and follow a predetermined strategy.
❓ What does Ilon Musk have to do with digital assets – BTC, Dogecoin?
He strongly influences the quotes of digital assets by leaving posts on social media. Several mentions of Dogecoin boosted the price of the altcoin.
❔ Why is bitcoin considered an energy-consuming token?
Mining uses a lot of energy – about 121 TWh per year. Most of the mining takes place in China.
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
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