The Ultimate Guide: How to Invest in Bitcoin

Bitcoin has been making headlines constantly because of its price fluctuations, which has sparked the question of which crypto to buy for the long term. The price of Bitcoin soared from $45,000 in mid-2021 to over $60,000 in October 2021. Dropping back down below $50,000 in December 2021.

If you're reading this, chances are you've heard of Bitcoin or altcoins, and you want to know how to invest in cryptocurrency. There are numerous ways to invest in Bitcoin. However, many people who want to invest don't know how to pick a cryptocurrency.

The steps on how to pick a cryptocurrency might seem daunting; the good news? It can be done securely and safely, and you can start investing in Bitcoin as long as you have basic knowledge of how it works.

Should I Invest in Bitcoin or Altcoins?

Source: Statista.com

Which crypto to buy for the long term? There's no one-size-fits-all answer. You should only invest in assets that you understand and that you are comfortable holding for the long term. Doing your own research is crucial in investing, and you should never invest in anything that you do not understand.

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There are several ways to invest in cryptocurrency, some of which include buying and holding till assets increase in value, day trading for short-term profit, or simply investing in a basket of coins as a hedge against a particular asset’s failure.

When it comes to investing, there are a lot of different strategies that you can use. However, one strategy is to diversify your portfolio. Some prefer to invest in Bitcoin only, while others may want a more diverse portfolio. There are several ways to invest in cryptocurrency - it's all about what suits YOU.

However, investing in multiple projects is a great way to reduce risks associated with investing—the more assets you have, the less likely it is that you will fail and losses accumulate.

Trading or Investing: Which Is Better?

Trading or investing? The answer to this question depends on several factors, including your investment goals, your risk tolerance, and your investment timeline. The two can be easily confused, but there's a big difference between them: Investing involves buying crypto assets you believe in and holding onto them for an extended period. This is a more passive approach, and you're more likely to make a profit if you invest in a well-established currency. However, you will need to be patient, and you may not see the results of your investment for some time.

If you're looking to make a quick profit, then trading top coins is the way to go. Trading is a great way to make short-term gains. However, to become successful at trading, it takes time and practice - which can sometimes take years. You can buy and sell cryptocurrency, and take advantage of changes in the market to make a profit. However, trading is a more speculative activity, and you're more likely to lose money if you don't know what you're doing.

A good deal of your work will be researching markets on various platforms and analyzing your strategy before executing any trades or committing capital. In the world of investing, it's all about strategy. Some prefer to invest for the long term (buy and hold the tokens) and not worry about short-term fluctuations, while others prefer to trade and profit consistently from small margins. Both strategies are excellent, and it all boils down to distinct personalities and risk tolerance levels.

Technical Vs. Fundamental Analysis

Source: www.ig.com

The decision on what makes a prospective investment depends on your level of cognitive analysis. In all honesty, there are no superior or inferior ways to invest in cryptocurrency, especially the fundamentals and technicals that come to play.

Medium to short price fluctuation might dishearten traders. Still, they are not what matters to investors, since the long-term objectives have more significance in terms of the project or value of coins, which boils down to fundamental analysis.

Fundamental analysis shows the information of assets based on team, development, management, marketing utility, white paper, reputation, and other considerable factors.

On the flip side, technical analysis involves considering previous market volume and price action and predicting their directions using candlesticks patterns, charts, and various indicators.

How to Invest in Bitcoin

The purchase of Bitcoin online can be seamlessly done through a fiat-enabling exchange. The other way you can buy is through peer-to-peer transactions. Using peer-to-peer may be a way to uphold anonymity, but they are not as trustworthy as using a verified exchange. Here are ten simple steps to get started:

1. Choose an exchange

2. Verify your identity

3. Make a deposit

4. Purchase BTC

5. Find the right BTC custodian

6. Watch for price fluctuations

7. Start trading (for more active traders)

8. Withdraw

9. Keep learning and repeat!

Other Ways to Buy or Invest in Bitcoin

  • Bitcoin ATMs. This is pretty similar to a normal ATM; however, it is specifically designed to buy and sell Bitcoin. According to Coin ATM Radar, over 27,000 Bitcoin ATMs are in the United States.
  • Peer-to-peer Bitcoin owners. The peer-to-peer feature allows you to buy Bitcoin directly from other investors. However, this requires extreme caution.
  • Grayscale Funds. Grayscale is a digital currency asset manager with two investment trusts: Grayscale Ethereum Classic Trust (ETCG) and Grayscale Bitcoin Trust (GBTC). These are publicly traded, meaning investors can buy them through discounted brokers. The Grayscale fund is a financial medium that allows investors to invest in a trust that, in turn, holds a large amount of Bitcoin.
  • Exchange-traded funds. This feature allows traders/ investors to invest directly in futures contracts for Bitcoin or Bitcoin directly.

The Pros of Bitcoin and Cryptocurrency Investments

The benefits of Bitcoin investment are many and potentially life-changing, especially for new cryptocurrency investors who want to make their money work for them without spending a lot of time or effort doing so.

Liquidity

Source: investopedia.com

Cryptocurrencies like Bitcoin are ranked among the most liquid investments, they are available on different exchanges, trading platforms, and crypto derivatives markets.

The high volatility makes it a lucrative investment vessel for investors or traders looking to make short-term gains. Additionally, many think that cryptocurrencies offer a great long-term investment because of their underlying cutting edge tech.

Lower Inflation Risk

Unlike fiat currencies, which are subjected to inflation, Bitcoin’s fixed supply means it is not easily manipulated.

One factor driving cryptocurrencies' price gains is their limited supply — only a certain amount can be mined. Meanwhile, central banks worldwide are printing money rapidly to keep inflation down.

The more fiat currency they produce, the less valuable it becomes. If you want to stand a better chance of maintaining your spending power over time, the best way is to invest in this digital currency; Bitcoin.

New Opportunities

Cryptocurrencies trading is relatively new, with new coins becoming mainstream daily. This leads to volatility, unpredictability, and price swings with opportunities for massive gains.

Before crypto, there were few options for alpha-seeking investors. Now that cryptocurrencies are gaining mainstream popularity, investors can enter an entirely new world of financial opportunities.

Plus, the central banks don’t control Bitcoin; cryptocurrencies are normally distributed through a worldwide network, so you can start investing in Bitcoin without your financial advisor or next-door neighbor knowing. As more people adopt them, they gain value, appealing to long-term and short-term investors alike.

Minimalistic Trading

Trading cryptocurrencies can be a lucrative business, but it's also risky. If you don't know how to minimize risk, your investment could quickly become an expensive disaster.

Bitcoin offers traders a minimalistic alternative: you can easily hold a Bitcoin in a wallet or buy and sell Bitcoin from an exchange. Plus, transactions are done in real-time, unlike stock trading, which could take weeks or months.

The Cons of Bitcoin Investing

Volatility

The high volatility makes crypto a risky investment.

Bitcoin Investing Is Not Regulated.

One of the significance of investing in Bitcoin is the lack of a regulatory overview. Generally, cryptocurrency tax and laws are based on the country and are often contentious and ambiguous. However, a lack of regulations can increase the rate of scams and fraudulent activities.

Where can I invest in Bitcoin?

Redot makes it simple to buy Bitcoin and other cryptocurrencies.

  1. Create a Redot account by going to the site.
  2. Make a deposit with a debit or credit card.
  3. Purchase Bitcoin.
  4. Keep it in your wallet.

Frequently Asked Questions

Should I Invest In Bitcoin Instead Of Other Assets?

When you start investing in Bitcoin, you're not just putting it into a specific business. Instead, Bitcoins represent an asset class with a market capitalization currently hovering around $1 trillion.

However, before you start buying Bitcoin, you should know a few things about investing in Bitcoin. If you don't have any experience with cryptocurrency or investing, then buying Bitcoins might not be a good idea.

What Should I Do with My Cryptocurrency?

Holding, buying, and selling Cryptocurrencies are major and general strategies used in trading or investing in digital assets. If you intend to hold your asset for long, you can use a Redot account to stake or transfer to an external wallet.

Do I Need a Bitcoin Wallet?

After answering the “where can I invest in Bitcoin” question, the next question is ‘where can I store my Bitcoin?’ If you're interested in investing, you have a few different options for storing your Bitcoin. You should consider whether you will actively make transactions with your Bitcoins. If you only plan on holding and don't see yourself needing to make any exchanges, then having an online wallet that can store your coins might be sufficient for your needs.

Why Is the Price of Bitcoins So Volatile?

One major reason Bitcoin fluctuates against fiat currencies is the perceived store of value versus fiat currency. Bitcoin has similar properties compared to gold. Core technology developers designed the digital asset to limit its production to a fixed quality of 21 million BTC.

People who want to purchase or sell Bitcoins must first sign up with a Bitcoin exchange and transfer money into an account. This is similar to opening a brokerage account, but it can be much easier and faster, depending on the exchange itself.

Conclusion

If you're thinking about the best way to invest in Bitcoin but are hesitant to do so because of a lack of proper guidance, this blog post is for you. We've provided some simple tips on how to invest in Bitcoin and what pitfalls to avoid. So don't wait another day before starting your investment journey! Let us know if you have questions or need help setting up an account - our team of experts at Redot will be happy to assist you.

*This communication is intended as strictly informational, and nothing herein constitutes an offer or a recommendation to buy, sell, or retain any specific product, security or investment, or to utilise or refrain from utilising any particular service. The use of the products and services referred to herein may be subject to certain limitations in specific jurisdictions. This communication does not constitute and shall under no circumstances be deemed to constitute investment advice. This communication is not intended to constitute a public offering of securities within the meaning of any applicable legislation.

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