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The last years have been rough for cryptocurrencies and those investing in them. Bitcoin, the original crypto coin and the blueprint for all the altcoins that followed it, has lost nearly 65% of its initial market value during 2022. This has led many to claim that the last year has undoubtedly been the worst in the history of BTC. While fluctuations are common in the cryptocurrency system, investors haven’t seen such a drastic shift before. Given how cryptos get a lot of hype, the changes generated a lot of irrational trading decisions as well. While some decided the best course of action was to purchase large quantities of Bitcoin because the prices were low, others sold the remaining amount of their portfolio, afraid to lose even more capital if the prices continued to drop.
Over January 2023, the Bitcoin price has recorded sustained growth. Since then, it has stagnated and remained virtually the same. While this might not sound good theoretically, it is actually good. Sudden spikes are rarely a good thing as they’re typically not sustainable enough. Since Bitcoin is fully decentralized, its price is determined by user engagement. Extreme rises make investors act erratically, causing prices to change even further.
But what can you expect from the current year in terms of investment opportunities? Given the fact that the market is still recovering from its annus horribilis, what strategy should you put in place to ensure your trading ventures are thriving this year?
February and beyond
Currently, the daily trading volume of Bitcoin is roughly $22 billion. Since cryptocurrencies have started to enter the mainstream market, Bitcoin has become more vulnerable to traditional market and finance changes. Currently, the US is recording cooling inflation levels, and it’s pretty likely that this change has also benefited BTC. And while the price has climbed considerably, rising from under $17,000 at the end of 2022 to nearly $23,000 as of February 2023, investors are still eagerly awaiting further gains.
Currently, analysts are split on how they believe 2023 will go for Bitcoin. Some believe that the trend will veer towards bullish this year. This isn’t only because the price climbed but also because 2024 is a year for a Bitcoin halving event. This happens once every four years and is the time when Bitcoin rewards to miners are cut in half. In 2024, the payout for miners will drop to 3.125 BTC. Traditionally, this event has been recognized as a positive factor as it helps the contracting supply. This helps bring momentum to the crypto price. If Bitcoin rises, the other cryptocurrencies are likely to follow suit and improve their values as well. So, if you own holdings in several different cryptocurrencies in your portfolio, this can be the year when you achieve significant revenue.
Others are convinced that the bearish tendency and crypto winter will persist in 2023, albeit somewhat diminished. For these investors and researchers, the current price spike is nothing more than a “bull trap”. Investors changing their strategy right now are, as such, bound to realize the error of their ways soon enough. Some have predicted that an even more significant fall will probably occur, and the price will drop as low as $10,000, if not more. Some banks have estimated that cryptocurrency could drop as low as $5,000, but this estimate is likely overly bleak and pessimistic.
Lucrative upscale
Regardless of how long this rise is going to last, there are still things you can do right now to improve your portfolio. Nobody knows for sure when the market will return to its previous values. Investing during the lowest points can help you increase your revenue by up to 4000% or more after the prices rebound. While fluctuations and price variations are typically associated with losing money, the truth is that they can also bring in profits.
Given the fact that the prices are still low compared to the values Bitcoin had in its heydays of 2020 and 2021, this is a perfect time to invest in crypto because the coin is more affordable. If you’re a beginner in trading, you might not get a better chance than now. Since you should generally not invest in crypto more than you can afford to lose, investing right now means that even if you lose some of the capital you put in towards your venture, you still won’t feel the loss as dramatically as if you had put in a substantial amount. Moreover, even if BTC never goes back to its heights of two or three years ago, even small upswings can prove lucrative for your ventures.
Taking risks
If you’re the type of investor that’s quite averse to risks, the current crypto market isn’t for you. Generally speaking, you should probably reassess your risk tolerance before trading into cryptocurrencies in general, but the present time is definitely one of the worst for this. Because the market is still wildly uncertain, and there’s no way to offer accurate predictions of what will happen, you’ll probably feel like a fish out of water right now.
However, if you’re determined to invest, consider your options carefully and think if you’re not more likely to regret missing out on investing rather than not. The Bitcoin market has recorded massive shifts and plummeting prices and has always recovered. If crypto jumps back to higher values, you’re likely to regret you missed out on investing.
However, this doesn’t mean that you should put all the money you have into your ventures. As always, you should be cautious when entering the investment world. Don’t put in more than you can comfortably afford, and don’t put funds you need for your daily life, or that would typically go towards savings, into crypto. Taking a measured risk isn’t the same as putting yourself in financial jeopardy.
Make sure to keep an eye out for any changes in the market as well. In the upcoming months, the Bitcoin environment is bound to change as well, and you should be able to adjust your strategy as the changes occur.
