3 Signs Bitcoin Is Getting Ready to Erupt
Some experts seem to think Bitcoin and other cryptocurrencies could see their trading prices elevate sharply during the coming months, especially Bitcoin with its halving.
Some of you are rightfully laughing right now as you read this, seeing as how Bitcoin has taken a downward plunge along with the world’s stock markets since the escalation of the Coronavirus. However, if you look back over the previous week or so, you would see Bitcoin kicking and scratching to get out of those holes.
The March Bitcoin Price Chart
Bitcoin has recovered about 25 percent of its value since its initial nosedive. Certainly, those of you who bought in when it was above $10,000, or even earlier when it was $15 to $18,000, might still be stinging from paper losses.
But many, including myself, see fluctuation in the cryptocurrency market as a good thing. To me, it is another chance to buy. Yes, day traders in the FOREX market are particularly interested in seeing extreme volatility, that’s how they can make a lot of money short-term, or lose it. I prefer to look long-term.
Three Reasons I Am Bullish Now Amidst the Volatility
#1 — Government Gifts or Tax Refunds, Depending on How You Look at It
As many of the world’s governments seek to keep their citizens afloat during the social distancing with the Coronavirus outbreak. Most will print new currency and float bonds. These government agencies will try to fight inflation and make more money available.
They will likely also apply what is known as “quantitative easing” or QE. QE is a method central banks usually use during periods of low inflation, or in this case, a pandemic. QE, along with money supply increases, will create more inflation.
Already, many nations have reduced the prime lending rate, which will affect interest rates in other areas as well. All that printed and borrowed money will seep into the world’s market and create inflation.
Inflation will eat up your savings. If you are earning 2.5 percent on your money and the inflation rate is 3.0, you are losing .5 percent of your savings interest.
Many speculators will likely turn to cryptocurrency as a hedge during this inflation paradigm. Therefore, Bitcoin should relate better to the price of gold than any country’s currency or “fiat” currency. Many of those fiat currencies are not stable enough (possibly the EURO) to withstand these inflationary pressures. This could result in a Bitcoin price eruption.
Investors disappointed with the stock market will be looking for another place to put their investments. Gold futures could answer that call, but buying and keeping gold is too expensive for the average investor. Not everyone has a vault in their home.
“Our basic thesis for Bitcoin is that it is better than gold.” — Tyler Winklevoss
The Winklevoss twin’s story is interesting in itself. Cameron and Tyler sued Mark Zuckerberg for “allegedly” stealing their ConnectU idea to create Facebook. They invested around $11 million of the settlement in Bitcoin at $120 a coin. I think you can do the math. Anyway, they are believed to be the first Bitcoin billionaires.
#2 — Safer Havens for Cryptocurrency Buying & Selling
Many investors are now looking to Bitcoin as a safe harbor. Previously, too many scam artists were offering fantastic deals during Bitcoin’s upswing. Now, people are more aware of these traps and are looking to places like Abra, Coinbase, Kraken, and others to invest. What’s more, it can be a low-cost or free method of transferring funds.
Although Bitcoin and other cryptocurrencies could see significant fluctuation short-term, a safer method of investing here is a buy and hold strategy.
We have been investing three percent of our income steadily for three years. Whereas it’s only $200 per month and not enough to bust our budget, it does take advantage of these price swings.
Even a minimum wage earner might be able to buy $20 worth a week. The investment world calls this dollar-cost-averaging. You invest the same amount every period regardless of the assets price. We spread our savings and investments out. Read my 5 Smart Investment Plans below.
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Did you know that one-fourth of all Americans have no retirement savings or even a pension outside of Social Security…
#3 — The Bitcoin Halving
I am not going into this too far because I genuinely do not understand it that well, nor know why it happens. I only know that while multiple nations will start printing more currency in the coming months, Bitcoin will decrease by half the number of coins created. This “halving” will surely shock many Bitcoin “miners” and perhaps the entire cryptocurrency investment community.
Something else I do know is the premise of “supply and demand.” If there is an abundance of anything on the market, its value is lower. If there is less available to buy, the price goes up. Therefore, with more people buying because of extreme losses in the stock market and fewer coins available, the price should naturally rise. This halving could cause a Bitcoin price eruption.
Bitcoin and other cryptocurrencies could realize an expansion due to many nations printing more currency. We also know the stock market’s collapse has left many investors skeptical. Likewise, the production of Bitcoin will get reduced by half soon.
Whether you believe Bitcoin will erupt or not, it is an excellent place to invest a small portion of your savings or investments. Dollar-cost-averaging is a proven method of investing a small stake in any investment vehicle. However, you should never invest your emergency savings because if you need it and the market is down, you won’t have a choice.
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Stephen Dalton is a retired US Army First Sergeant with a degree in journalism from the University of Maryland and a Certified US English Chicago Manual of Style Editor. He is a freelance journalist currently living in the Philippines.
This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.