6 Things to Consider Before Investing in Bitcoin

By July 9, 2020August 28th, 2020No Comments
Things to Consider Before Investing in Bitcoin

Bitcoin (BTC) captured the imagination of investors globally after it first started trading in the early 2010s.

Mainstream Wall Street financial investment firms and hedge fund managers are looking to include bitcoin in the portfolios of their clients. Some even consider BTC to be a safe-haven investment. The tribe is growing by leaps and bounds with every passing day.

Eager to join this rapidly growing community of bitcoin investors, yourself? Then, there are a few things that you need to consider. Before making the move.

Study About Bitcoin

Bitcoin is a very different asset as compared to its traditional counterparts. Make it a point to go through the details of how it works, the underlying mechanism, etc.

Start by reading the white paper. You can also check out our bitcoin 101 article. https://blog.wazirx.com/what-is-bitcoin/

Go Through BTC Development Activity

A cryptocurrency’s success can be gauged from the development activity surrounding it. Bitcoin has a thriving community of developers and contributors on Github.  All of them work to keep Bitcoin Core, bitcoin’s open-source software alive and running.

As a part of your study, you can check out all the entries there. The video below also gives an insight into bitcoin’s development progress from 2009-2018.

Bitcoin Development: 2009-2018

Analyze the Market

Market analysis is crucial and mandatory. The bitcoin market has showcased incredible efficiency with 99.98% uptime since its inception in 2009. But, it still makes sense to do some research on how it has grown since the very beginning.

Bitcoin has the largest market capitalization amongst all cryptocurrencies. The latest figures point at a $175 Billion valuation. It represents the size of the entire bitcoin market and is calculated by multiplying BTC’s price with the available supply.

Bitcoin Market Cap, Source – TradingView

Since we mentioned supply, it is imperative to mention that bitcoin has limited supply and issuance. At the current rate, approximately 900 bitcoins are created every day which will keep diminishing until the cap of 21 million coins has been reached. As of writing, around 18.4 million BTC are in circulation.

Be a Part of Bitcoin Communities

Your own study and research can seem insufficient sometimes. The bitcoin market is evolving and so are the communities talking about BTC. When it gets daunting to figure out ways to invest, relevant groups can save your day. Become a part of Telegram forums like IndiaBits, Bitcoin India,WazirX to learn more and stay updated.

Keep an Eye Out for Scammers

You must know that like every other investment market, the bitcoin space too has its share of scammers. Cybercriminals try different methods to convince you to give up your BTC.

Sometimes they pose as someone you trust. Other times they just pick up your email, cell phone numbers, etc. right from your ‘accounts on the internet’. You must be aware of the tricks employed by these online robbers and plan adequate security for your BTC investment.

Learn Technical Analysis

Stock market traders heavily use technical analysis to place their trading/investment bets. The tools are highly reliable and can be used extensively to make prudent investment decisions.

In your study and research, you will come across a variety of crypto technical analysis (also called TA) articles on the internet. These articles quantify trades and help investors make informed decisions. Consider learning TA to benefit from your crypto-asset investments.

In India, the National Stock Exchange provides several live courses for beginner traders and investors. The material may be designed for traditional financial markets but can be used for cryptocurrency trading and investment as well. You can check them out here: https://www1.nseindia.com/education/content/online_courses.htm

Be Prudent in Investing

Bitcoin is an asset with a high risk/reward ratio. This means that the returns potential and the possibility of losses both are extremely high.

Right from the start, you should be careful in allocating funds. Invest in bitcoin using only the money that you can afford to lose.

And like all other assets, it just doesn’t end with the investment. You must make it a point to track the value of your funds. You can check the latest bitcoin price movements in the ‘Markets’ section on the WazirX app. For more information on how to use the app, check out this video below:

Step by Step Guide: How to use WazirX

Bitcoin investment can open up new opportunities for wealth creation. There is a learning curve involved that needs to be traversed diligently first. The aforementioned tips will provide you with the necessary impetus in building a strong knowledge base regarding Bitcoin‘s mechanism and market structure. We just want to ensure that your journey in becoming a successful and sustainable bitcoin investor begins with a solid head start.

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