If there’s a cryptocurrency you should know about, it’s bitcoin.
is by far the original and most valuable cryptocurrency, despite its huge (and normal) swings in recent months, ranging in value from under $30,000 to over $60,000. bitcoin has also seen a surge in new investors, with more than half of all current bitcoin holders buying in the last year.
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“I invest in bitcoin for three reasons: one is that the supply is limited, the second is decentralization, and the third is the king of the category,” says kiana danial, author of “cryptocurrency investing for dummies ” and an investment expert. “everyone knows about bitcoin and immediately gives it this value.”
bitcoin was created in 2009 by an anonymous figure under the pseudonym satoshi nakamoto to function as a peer-to-peer electronic cash system, but has since attracted investors who see it as a store of value currency, sometimes described as like digital gold. bitcoin laid the foundation for blockchain technology and decentralized finance.
“Bitcoin, by nature, doesn’t really solve a problem,” says danial. “It was just a showcase of decentralization.”
By those principles, the cryptocurrency market, now consisting of thousands of cryptocurrencies, has grown to a valuation of over $2 trillion. While bitcoin has the longest track record for investors to consider, it is no less volatile.
what is driving the price of bitcoin?
Bitcoin price fell below $24,000 on Friday after a strong week. bitcoin topped $24,000 multiple times this week, but is seeing “major resistance from the $25,000 level,” according to edward moya, senior market analyst at brokerage oanda.
“It looks like bitcoin might take a little longer to break above the $25,000 level, but when it does, its momentum could initially take it to the $28,400 level,” Moya says.
Over the past several months, bitcoin and other cryptocurrencies have largely remained under pressure as investors battle rising inflation, geopolitical crises, and tighter monetary policy by the Federal Reserve. Lately, the crypto market is increasingly following the stock market, which, combined with more widespread adoption and falling prices from the year onwards, makes it even more intertwined with global economic factors, experts say.
In the short term, all of these factors have created some additional noise and volatility in the stock and crypto markets, but this is typical in times of uncertainty. volatility is standard in the cryptocurrency market, so experts predict that the ups and downs will continue.
Bitcoin’s year-high so far remains in the early days of January, when it almost hit $48,000. In that same month, bitcoin also hit its six-month low as it fell below $34,000. bitcoin has lost 40% of its value since its November. 10 all-time high above $68,000.
the price of bitcoin has been between $23,000 and $25,000 this week. Here’s how its current price compares to its daily high in recent months:
So what should crypto investors do in light of this volatility? nothing, according to the experts we’ve spoken to. Given the volatile history of cryptocurrencies, this surge is not a guarantee of a long-term reversal. the price of bitcoin is just as likely to fall again as it is to continue rising. the future of cryptocurrencies is sure to include much more volatility, and experts say that’s something long-term crypto investors will have to continue to contend with.
bitcoin predictions and the future of cryptocurrencies
Bitcoin has shown as steady a rise in value over the years as any other cryptocurrency on the market, so it’s only reasonable that bitcoin investors would be curious as to how high it may ultimately get. .
Conservative bitcoin predictions say the cryptocurrency will hit $100,000 by 2023, but more optimistic crypto enthusiasts say $250,000 is not far in the offing. Large financial institutions have also made their own predictions, with JPMorgan seeing a long-term high of $146,000 and Bloomberg saying it could reach $400,000 by 2022. A recent study by the German bank found that about a quarter of investors in bitcoin believe bitcoin prices will be over $110,000 in five years. Because bitcoin is so new, price predictions are mostly informed speculation.
what bitcoin investors need to know
Bitcoin is a good starting point for beginning crypto investors, according to experts we’ve spoken to. but you shouldn’t invest in bitcoin just because others are doing it. More than anything, know what type of investor you are and only buy bitcoins in a way that works with your long-term investment strategy.
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if you are investing in bitcoin, expect volatility. Just as you shouldn’t let a price drop influence your decision to buy bitcoin, don’t let a sudden price spike upset your long-term investment strategy. More importantly, don’t start buying more bitcoins just because the price is going up.
investors should continue to hold and not worry about fluctuations. no matter if cryptocurrencies go up or down, the best thing to do is not to watch them. set it and forget it as you would any traditional long-term investment account. if you let your emotions get in the way, you could sell at the wrong time or you could make the wrong investment decision.
how to protect your bitcoin investments
If you’ve built bitcoin into your investment portfolio, here are some steps you can take to protect it:
1. watch out for crypto red flags
There are some common red flags in crypto, similar to classic money transfer and credit card fraud scams, to watch out for. include:
- obvious typos and misspellings in emails, social media posts, and during any communication
- promises to multiply your money
- contractual obligations that bind you to having crypto without being able to sell
- fake influencers or claiming to be a celebrity
- psychological manipulation such as blackmail or extortion
- big social media crypto schemes
- promises of free money
- vague details about where your money goes
2. protect your digital wallet
another way to protect your bitcoin is to implement good digital security habits, similar to how you would handle large sums of cash by placing it in a secure or fdic-insured savings account. Experts say that small-scale investors with a few hundred dollars worth of bitcoin are probably fine holding it on a mainstream exchange like Coinbase. but if you have a significant amount of bitcoins, you can incorporate a crypto wallet for additional custody. there are two types of crypto wallets: hot wallets and cold wallets.
hot wallets are used to store crypto online. they are secure, but more susceptible to hacking than cold storage, which is when you store crypto offline in a piece of hardware. Think of cold storage as a kind of safe in a USB drive format. it’s more secure, but if you forget your password or lose your device, you could lose access to your money forever.
Because cryptocurrencies stored in hot wallets are not fdic insured, you’ll want to ensure that any platform or wallet you store your crypto on has strong security measures, including:
- two-factor authentication
- storing a portion of the stock in your own cold storage
- private insurance policies in case of theft or hacking (apart from the fdic insurance)
3. keep track of your wallet keys
You only get a single key to access your wallet, which means you have to be very careful not to lose your key or have it stolen. don’t share your private key with anyone, just like you wouldn’t share your social security number or debit card pin. keeping strong passwords that you update regularly and not using the same password for multiple accounts will make you less vulnerable to attacks and scams.
4. report fraud
Report fraud and other suspicious activity to any cryptocurrency exchange you used to complete the cryptocurrency transaction and to the following offices using these links:
- the ftc: reportfraud.ftc.gov
- the commodity futures trading commission (cftc) at cftc.gov/complaint
- us . securities and exchange commission (sec) at sec.gov/tcr
- if the fraud involves extortion or blackmail, you can also go to the fbi
how to buy bitcoins
Once you’ve learned the lingo, accepted the risk, and met your other financial priorities, you’ll need to buy. the process to buy bitcoin is the same as the process to buy any other altcoin.
first, you’ll want to choose a cryptocurrency trading platform to trade your u.s. dollars for bitcoin or other digital currencies. Depending on the exchange you choose, you may be required to provide information such as your social security number, identification, and your source of income when you create your account. Once you have created your account, most exchanges will ask you to connect your bank account or a debit card. that way, you can fund it with fiat currency, like us. dollars, to buy bitcoin. Once you have connected a payment method, you will be able to place your bitcoin order. this process may differ depending on how far along the exchange is.
Usually if you use a beginner platform like coinbase or paypal, you can simply enter the dollar amount you want to exchange for bitcoin and buy at the current exchange rate (after taking fees into account). If you use an exchange designed for more active trading, you may have the option to place both market and limit orders.
Finally, make sure your crypto is stored securely. Many exchanges allow you to leave your investment within your account, which is easier for most beginners. but if you want to further protect your digital assets, you can transfer them to a hot or cold wallet.
how to choose an exchange
There are hundreds of cryptocurrency exchanges that you can use to buy crypto online, but some of the most popular ones are coinbase, gemini, and kraken. these exchanges are online platforms where you can buy and sell cryptocurrencies.
You can narrow your search for the right platform by paying attention primarily to security and fees. If you plan to keep your crypto in your account with an exchange, make sure you choose an exchange that uses offline cold storage and has strong theft protections. Some exchanges also have separate insurance policies to help protect investors from potential attacks.
Exchange fees can vary widely and may be applied as a flat fee up front or as a percentage of your transactions. fees can be based on price volatility and many are charged per transaction. While fees should definitely be a consideration, experts say you also get what you pay for, especially when you stick with the larger, more established exchanges like Coinbase. if an exchange has more protections, better security, or other features that are important to you, it may be worth slightly higher fees.
best exchanges for cryptocurrency trading
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Cryptocurrency exchanges are a dime a dozen, but there are only a few that we think make sense for crypto investors. The volatile and speculative nature of cryptocurrency investing presents risks to investors no matter how and where they buy it.
This is why the security of your investment should be a top priority when choosing a cryptocurrency exchange. Cryptocurrency exchanges that have been around longer are usually a safer bet than newer ones. here are our picks for the best cryptocurrency exchanges:
- coinbase: good for beginners
- gemini: good for experienced investors
- etoro: good for practicing cryptocurrency trading
bitcoin price history
bitcoin has a much longer history compared to other cryptocurrencies, although it is still in its relative infancy compared to the 200+ year history of the us. uu. stock Exchange.
Bitcoin was created in 2009, with an initial price of $0. in 2010, bitcoin’s first “big” jump happened. the price rose from a fraction of a cent in the spring to $0.09 in July. very few people, except for niche techies and finance enthusiasts, knew enough about bitcoin to buy the currency.
Bitcoin broke $1 in April 2011, entering its first mini “bull run” and surging roughly 3,000% over the next three months. in November 2011, the price bottomed out again at $2. bitcoin did not recover in 2012, ending the year between $13 and $14. in november 2013, bitcoin topped $1,000; then the price fell sharply in December to around $530. Between 2014 and 2016, the bitcoin price largely stagnated.
but thanks to the media coverage and the sharp increase in the price of bitcoin, the cryptocurrency industry began to take off between 2017 and 2019. in early 2017, bitcoin finally broke above $1000 again and began a phase of uptrend. prices doubled to $2,000 in mid-May and then skyrocketed to more than $19,000 in December. At the end of 2019, the price of bitcoin dropped back to $7,200.
In early 2020, as the coronavirus pandemic shut down the economy, the price of bitcoin began to accelerate in its ascent. by December 2020, the bitcoin price had risen more than 300% since January. the year ended with a price of around $29,374, the highest ever seen.
Bitcoin continued to grow in 2021, doubling in value. bitcoin spiked to an all-time high of over $64,000 in the first half of 2021, then quickly fell back below $30,000 over the summer. bitcoin hit another all-time high of over $68,000 in November 2021, but by January 2022 it had dipped below $35,000 again. As of April 2022, the price of bitcoin is around $45,000.
bitcoin versus ethereum
Bitcoin and Ethereum are the two largest cryptocurrencies by market cap and trading volume, but they are very different when you look beyond their shared popularity.
Not only do they have technical differences, but they also offer two completely different value propositions to investors, which could be the deciding factor for you. Many investors view bitcoin as a store of value, like gold, that can be used as a hedge against inflation. Ethereum, on the other hand, is a software platform that allows developers to create other crypto-oriented applications. To use Ethereum, developers have to purchase and pay fees to the network in Ethereum’s native digital currency, Ether.
There are similar risks associated with bitcoin and ethereum, and the growth potential of either is highly speculative. both are good options if you’re just starting out on a crypto investment journey, and you could split the difference and invest in both, experts say.
about bitcoin
bitcoin was the first cryptocurrency and is known as digital gold. bitcoin is the most valuable crypto on the market, but it is still highly speculative and volatile.
when was bitcoin created?
The invention of the bitcoin currency (btc) was simultaneous with the invention of bitcoin as a blockchain, and was the first of its kind in history. was created in 2009 by an anonymous person or a group of people, known under the pseudonym satoshi nakamoto.
what gives bitcoin its value?
bitcoin is valuable thanks to its limited supply, constantly increasing the demand from a larger number of investors. some have also described it as a hedge against inflation.
Unlike investing in the stock market, with more predictable returns on investments like index funds, investing in bitcoin has been compared to investing in gold or other alternative assets like art or horses. that’s because there is a finite amount of bitcoin out there. while a company can issue more stock options, there will only be 21 million bitcoins. therefore, even if the value of the dollar plummets, bitcoin, like gold, will retain a separate value in theory.
bitcoin market capitalization
Bitcoin market capitalization is calculated by multiplying the current number of existing coins (more than 19 million) by the price of bitcoin at a given time. As the price of bitcoin fluctuates, which it does frequently, so does its market capitalization. Over the past few weeks, the bitcoin price has been between $34,000 and $47,000, which translates to a significant range in market cap:
- $38,000 x 19 million = $722 billion
- $42,000 x 19 million = $798 billion
- $46,000 x 19 million = $874 billion
frequently asked questions
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