Should I Invest My Savings In Bitcoin Trading?

Bitcoin Trading

I first wrote about bitcoin in early 2017, when it was still in its infancy. Due to the significant changes in the cryptocurrency market over the past several months, we need an update. Consider the original opening paragraph of my column from March of 2017 to gain some perspective: “If you’ve been keeping an eye on bitcoin prices recently, you’re probably aware that they’ve been on a record-breaking run. One bitcoin is now worth over $1,300, nearly double the value of an ounce of gold at the time of writing. As a point of reference, bitcoin prices were in the $300 — $400 area for the most of 2015.”

Those who made bitcoin investments years (or even as recently as March 2017) ago are likely to be ecstatic. Should you, on the other hand, join them? In any case, a stock produces cash, which eventually benefits the individuals who hold it. Similarly, bonds fall under this category. Bonds spit out a lot of money (usually twice a year). The value of the rental property may increase (or decrease) over time. But, in any case, rental property exists to produce income for its owners – cash over the expenses of keeping the property in good condition. Are you searching for an appropriate platform for bitcoin trading? Visit Bitcoin Champion Auto-Trading App.

What Exactly Is Bitcoin?

In general, bitcoin is a cryptocurrency utilized by internet companies and large corporations all over the globe. In other words, bitcoin is worth whatever the market determines it to be worth at any particular point in time. It isn’t an issue in and of itself; nevertheless, investing in bitcoin presents some unique difficulties. There are at least two fundamental issues with investing in bitcoin right now, no matter how enticing it may seem at the time — and despite the current run-up in price:

If There Is Inflation, You Lose Money

Or, to put it another way, you’re betting that the price of bitcoin will rise about the value of the US dollar. It is because conventional assets have the potential to produce income. For example, stocks represent a portion of a company’s ownership. Businesses operate only to make a profit.  In any case, a stock produces cash, which eventually benefits the individuals who hold it. Similarly, bonds fall under this category. Bonds spit out a lot of money (usually twice a year). The value of the rental property may increase (or decrease) over time. But, in any case, rental property exists to produce income for its owners – cash over the expenses of keeping the property in good condition.

It is not the case for bitcoin, gold, or other precious metals, as well as for “Forex,” commodities, or fine art. This kind of investment does not produce any revenue. The price of most goods rises at the same pace as inflation. Furthermore, the value of money does not increase since inflation is what it is: a reduction in the value of currency!

On average, economies continue to expand. The demand for products and services may rise as a result of a rising economy. Furthermore, organizations that issue money often “print” additional currency. It lowers the value of that money, resulting in the need for more of the same coin to purchase the same product or service. Consequently, by its nature, a currency investment should not be capable of increasing in value alongside inflation. As a result, not only does your currency investment lose money as a result of inflation, but it also loses money as a result of the bid/asks spread — the price of purchasing into a foreign currency – on the market.

Reversal Of The Mean

The term “mean reversion” refers to the concept that whatever goes up must come down – and vice versa. While mean reversion in and of itself is not a negative thing, it is essential to keep in mind when it comes to investing in bitcoin in particular. It is because things do not create money. As a result, if you want to profit from bitcoin as an investment, you should avoid purchasing during the height of the market. On the other hand, recent price increases indicate that we may be nearing the apex of the bitcoin market – or, at the very least, on our way there.

About the author

Allen Parker

Allen is a qualified writer and a blogger, who loves to dabble with and write about technology. While focusing on and writing on tech topics, his varied skills and experience enables him to write on any topic related to tech which may interest him. You can contact him at allen@pc-tablet.com.