The digital asset market is booming. The ecosystem includes more than 7,000 coins and tokens. Not all of them are interesting for investors, most of them are “empty” projects. The price of such assets depends on public attention and celebrity media support. Coins with the top 50 in terms of capitalization are of greater interest to investors. They show confident growth, bring profit. From the perspective it is better to invest in bitcoins which show relative stability and dynamics, has confidence of large investors. On the contrary, “meme” cryptocurrencies, “fan” tokens, and scam projects are unsecured. Their price is associated with temporary interest, a hype.
Reasons for Bitcoin’s explosive growth
By 2021, the first cryptocurrency has gone through several stages in its development. Many countries have adopted loyal legislation and legalized digital assets (as a means of payment or as a commodity). Bitcoin gained the trust of users. Large institutional investors and financial companies began to look at digital assets.
In 2021, the coin increased the maximum price several times. In early November, the rate above $68,000 was fixed, after which there was a correction. Among the reasons for the growth in the value of the koin, experts say:
- Interest in the cryptocurrency from institutional investors. MicroStrategy, Tesla and other world-renowned companies invested in digital assets in 2020.
- Society’s fears and distrust of traditional banking and financial systems due to the coronavirus epidemic have changed people’s attitudes toward the usual way of life. Bitcoin seemed more stable than other instruments and fiat currencies.
- Development of DeFi projects, NFT and blockchain-based applications, their accessibility and simplicity.
- Liberalization of cryptocurrency legislation in different countries.
- Investments of ordinary users.
- Statements by famous people, couched in positive terms.
Even after the highs update, investors continue to invest in Bitcoin in 2021.
Should we expect rapid growth of BTC in the future?
Forecasts by analysts and experts in the cryptoindustry regarding the rate differ. The future value of BTC in the period from one year to 10 years can range from $100,000 to $1 million. It is difficult to clearly predict the price of the coin due to the high volatility of digital assets.
Price corrections are possible in the short term. Therefore, investors who invest in bitcoin at the end of 2021, hoping for a quick profit, need to calculate all the risks. Those who work by HODL strategy with long-term holding of coins, on the contrary, it is worth to buy more coins in the period of falling. In the long term, the rate will rise.
The main risks of investing in Bitcoin
The current situation in the digital world is not at all like 2017. Assets have increased their status in the eyes of society, big investors. Decentralized applications in lending, deposits have appeared. However, investment risks exist, and one should be aware of them when choosing a tool for trading or saving capital.
Opinion of experts
Considering the risks, investing in bitcoin is profitable in the long run. At least this is true for beginners in the digital asset market. It is better to invest money in BTC and keep it.
Experienced traders play on the volatility of the asset. They apply different trading strategies, analyze information, monitor the situation, study the news background.