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BERKELEY'S NEWS • NOVEMBER 18, 2023

Should you invest in Bitcoin?

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DECEMBER 21, 2022

Is it advantageous to put money into the bitcoin trade?

Blockchain technology has grown in popularity and is steadily making its way into global trade. For example, more people can now engage in Bitcoin trading through platforms like bitcoin billionaire platform. Gaining trust from the market means that companies should put their money where their mouths are, hence investing in crypto at the highest levels.

It is not surprising to find that many major financial services companies have already taken a keen interest in Bitcoin, including IBM finding a use for it in cross-border payments, America Online (AOL) opening its cryptocurrency exchange, and American Express announcing to launch of a cryptocurrency trading platform for over 50 countries this year. 

Plus, there are plenty of other benefits, including faster transactions with no intermediaries needed and a reduction in fees when exchanging value between currencies or using it as an investment tool. 

The rising popularity of bitcoin:

The popularity of Bitcoin has allowed an array of other cryptocurrencies or so-called altcoins to emerge gradually. Each has its characteristics and uses, but it is safe to say that many of them are based on the same technology that powers Bitcoin.

Despite the popularity, many in the finance world still have yet to adopt Bitcoin trading – most likely due to a lack of understanding, a lack of experience, and a network with crypto traders. So what is holding back some traders from participating in cryptocurrency trades? Fear is one obvious factor, while uncertainty over regulations and general volatility in crypto trading prices are probably other reasons why many companies are reticent about venturing into this area.  

Ultimately, Bitcoin trading is a high-risk, high-reward activity not just for traders but also for investors as well. Therefore, it is essential to understand the market adequately to determine if investing in Bitcoin will be a good or bad investment.

1. The Market Is Large and Growing Fast

The market capitalization of cryptocurrencies increased at an annual rate of around 30% in 2022, which can be linked to the growth in the number of miners contributing to proof-of-work consensus protocols such as Bitcoin and Ethereum. There are also vast numbers of investors entering the market, as well as companies developing cryptocurrency applications. The more participants in the market, the bigger it becomes, and no one can overstress this point.

2. The Incentives Are Aligned

We must always find out why the crypto prices go up and down. However, we can say that there is a positive correlation between increased trading volume and price movement in Bitcoin: Many traders have argued that a significant driver of Bitcoin prices is those buying in or going long on Bitcoin at an increasing rate – hence increasing volume. Traders going short or selling on Bitcoin at an increasing rate – hence decreasing volume – can also depress prices. While miners and investors may have motivations for buying and holding onto Bitcoin, their incentives are aligned with one another because there is an increasing demand for Bitcoin as an asset, resulting in higher prices.

3. There Is a Lack of counterparty Risk

The crypto market does not rely on banks and other financial service providers to transfer value from one person to another. Instead, crypto users can directly exchange cryptocurrencies such as Bitcoin or Ethereum for making a trade. It contrasts with the traditional financial system, where we need a trusted third party, such as our banks or payment processors, to facilitate a transaction on our behalf. 4. There Is a Global Radio Effect

A growing number of bitcoin ATMs are located in some of the top cities around the world, such as Singapore, Tokyo, and Hong Kong. It means that a Bitcoin owner can use Bitcoins to buy goods and services from people who have cash on hand – like anyone in the subway or on their way to work. It is another example of how traders can benefit from using Bitcoin as an asset because there is more demand for Bitcoin than it has supply. Many users like this because they do not have to wait to get their money cashed out when they return home or work during off hours.

4. The New Frontier in Trading

Cryptocurrency traders are passionate about their market because they see a lot of potential in it in the long term. It is why so many view trading Bitcoin as a unique opportunity to engage in this new market, not to mention new ways of growing their wealth. This technology might involve substantial risks, but many see the potential that can never be had by trading fiat currencies such as the USD and Euro. Bitcoin owners can enjoy all sorts of products or services from worldwide merchants accepting cryptocurrency payments.

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LAST UPDATED

DECEMBER 21, 2022