You are considering buying some bitcoin, but how do you buy at the best time to make the most of your investment?
Bitcoin’s price is occasionally volatile, and it has grown tremendously over the years. Are the best days behind us, or is it still worth making an investment?
It is completely normal to have doubts about when to buy bitcoin, or if you should buy any at all. In this article, we walk you through these questions to help you make a decision by yourself.
Should I Buy Bitcoin?
If you have no bitcoin, and some disposable income that you can miss, then it may be smart to consider buying some, even if you are unsure of its future.
Because there is a chance that you are wrong and that Bitcoin is the future of money. If that happens and you do not have any, and you need to acquire it at much higher prices to still be able to buy goods and services, it could significantly impact your future purchasing power.
This may sound far-fetched to some people, but historically all government-issued fiat currencies have collapsed in value, as governments can not help themselves but print more.
Image source: @anilsaidso
Even if you ignore the signs that this outcome is already underway for today’s currencies, can you say with 100% certainty that they will not collapse in your lifetime, or your children’s lives? And if you think it has a 1% chance of happening, would it not make sense to store 1% of your wealth in Bitcoin? Buying even a little bit of bitcoin is insurance for such a future, and in the worst-case scenario, you would not lose any life-changing money.
Of course, this assumes that you understand why Bitcoin is different from other investments, and why Bitcoin has any value to begin with. If that is not already the case, it would be prudent to take your time to learn more about it.
Like any other investment, bitcoin does not come without risk, and it is smart to take some time to understand what you are investing in—whether that is real estate, stocks, gold, government bonds, or bitcoin. We have many articles on River Learn to help you start or continue your journey. As you learn more about the technology, what secures it, and what gives it value, you may feel more confident to invest a larger percentage of your wealth into it.
What If I Can’t Afford One Bitcoin?
A common objection people have to buy bitcoin is that they can not afford a full bitcoin, and thus feel it is meaningless.
With only 21 million bitcoin that will ever exist and over 8 billion people on the planet, you can quickly see why very few people will own that much, and how owning even a small amount now could become very meaningful in the future.
When Should I Buy Bitcoin?
When people make the decision to buy some bitcoin, they often spend too much time worrying about things like:
- Am I buying bitcoin at the best price?
- Should I wait for the bitcoin price to drop?
- Is it better to buy bitcoin at a certain time of the day?
- Is it better to buy bitcoin during the week or on a weekend?
- Is it smart to wait for announcements from the Federal Reserve?
- Should I buy bitcoin if the stock market goes down or up?
If you find yourself thinking along these lines, it may be a sign your Bitcoin knowledge still has gaps, and that you are (understandably) more concerned about the short term.
Timing the market is incredibly difficult, and no Bitcoin or finance experts can consistently predict what will happen to the price, no matter how much experience they have or what promises they make.
If you believe in the long-term value proposition of Bitcoin to protect and potentially increase your purchasing power, then buying it 5 or 20% lower should not make a large difference. Instead of spending hours watching trading videos and reading a dozen articles with analyses on price predictions, consider a more hands-off strategy called Dollar-cost Averaging.
With a DCA strategy, you split up the total sum you want to invest into smaller purchases over time, such as on a daily or weekly basis.
Dollar-cost averaging reduces your exposure to price volatility and ensures that over time, you buy your bitcoin at a nice average price in an automated way. At River, we charge no fees on recurring orders, because we believe it is the best way to get introduced to Bitcoin.
Does Bitcoin Have a Future?
It is likely that Bitcoin has a future, as no other cryptocurrencies have managed to replicate or exceed its success, while fiat currencies are increasingly in trouble and have no viable path to redeem themselves. Policy changes, taxing the rich, or any other creative ideas would not have anywhere near enough impact to reverse the downward spiral all global currencies are in. We can not stress enough that nobody is coming to save our savings and retirements.
The real question is how much of a future does Bitcoin have? Will it merely exist as an option on the side, or be a store of value and a medium of exchange around the world?
At River, we of course strongly believe Bitcoin has a bright future. We dedicate our careers to building the best Bitcoin business we can, and have invested a lot of time into understanding what gives it value and why Bitcoin will not be replaced by another project with better technology.
But, understandably, not everyone has such conviction. There are many factors that can cause doubt, such as:
- Not getting a great explanation or introduction to Bitcoin.
- Being surrounded by people who are highly skeptical about it.
- Media influencing opinions.
- Bitcoin already rising in value tremendously over the past decade.
- The feeling of having missed the boat by not investing the first time you heard about it.
Once in doubt, some people will tell themselves all kinds of reasons why Bitcoin does not have a future—such as the government banning it, or a better version coming along that they can invest into 10x or 100x their money. As shown below, some people got lucky during the 2017-2018 bull market, but most end up losing money while taking high risk.
Image source: K33
Over the past decade, these arguments have been proven wrong many times over. Bitcoin’s network effects are too strong to overcome and its fair distribution mechanism is nearly impossible to replicate. Governments have tried and failed to ban it, and Bitcoin’s technology keeps getting better over time. Many projects have tried to dethrone Bitcoin but failed due to centralization, greed from founders, or building solutions to unimportant problems.
We also believe Bitcoin has a bright future because fiat currencies increasingly do not. There are no practical solutions to the financial holes many governments are in with deficit spending and enormous debts to repay. These problems lead to inflation, which will inevitably drive some wealth out of the reach of governments as people look for safe havens, and thus towards other assets that cannot be inflated. One of these options is Bitcoin, which, unlike other assets, can easily cross borders and be taken anywhere, while always remaining under your full control.
It is hard to imagine a future in which such an asset would not be useful, but we recommend you start learning more about Bitcoin to build up your confidence. If you already feel confident, consider dollar-cost averaging without fees at River.
- Even if you believe it is unlikely Bitcoin has a future, it may be good to own a little bit in case you are wrong.
- Instead of trying to time the market, it can be wiser to set up a dollar-cost averaging strategy to automatically buy bitcoin on a recurring basis.
- After over a decade of projects trying to dethrone Bitcoin and a long history of fiat currencies collapsing, it is likely Bitcoin has a future.