Is It Too Late To Buy Bitcoin?

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Bitcoin has had its highs and lows, but since the genesis block was first mined way back in 2009 the price has increase has been mostly parabolic.

These astronomical gains have led many to believe that they’ve missed the boat when it comes to investing in Bitcoin (BTC) and cryptocurrency in general, and it’s simply ‘too late’.

But with new All Time Highs (ATHs) coming thick and fast, this might not be the case, despite the odd crash in between.

Without a fully operational time machine though, it’s impossible to say where Bitcoin’s price will go next, although there are plenty of people on social media who claim to possess this information!

Bitcoin has been one of the best performing asset classes of the past decade, despite a regular flow of negative press coverage. Just look at this chart:

But the unregulated, wild-west nature of the cryptosphere still puts a lot of people off investing, especially given the wild price swings which regularly punctuate Bitcoin’s price trajectory.

There are other concerns as well.

Regulators around the globe are increasingly turning the spotlight on Bitcoin and the wider cryptocurrency markets.

Increased regulation could be a good thing for Bitcoin

However, increased regulation is may not always be a bad thing, even if it goes against the original libertarian ethos of the crypto.

On the one hand regulation brings crypto into the mainstream and legitimises it. This means some investors will feel more comfortable dipping their toes in the water.

It could also lead to more ‘regular’ financial products coming to market. Such as as the Bitcoin Exchange-Traded Fund approved by the US Securities and Exchange Commission in 2024.

Products like this will attract institutional investment which in turn will lead to an increase in Bitcoin’s price.

However, if increased regulation ultimately leads to a crackdown – or outright ban – on crypto in the west then this would undoubtedly have a negative impact.

China has already taken this step, while, at the time of writing, Russia was mulling over a similar move. Other countries also have a negative view of Bitcoin and are considering their own ways of curbing its use.

Even though it’s impossible to ‘switch off’ Bitcoin due to its global decentralised nature, making possession or use illegal would block out institutional investors and likely deter most individuals as well.

How far this will go is anyone’s guess, but if this negative sentiment cascades around the globe, it’ll send Bitcoin’s price plunging.

Environmental concerns could lead to further Bitcoin crackdowns

There are also environmental concerns as well which could impact the future of Bitcoin as a profit generating asset class.

Mining Bitcoin consumes a vast amount of electricity and requires the use of dedicated ASIC mining computers. Take a look at this mining farm:

Although the mining industry is making significant inroads into using greener forms of energy, critics would argue that this doesn’t go far enough.

There are also concerns about the e-waste resulting from the relatively brief lifecycle of mining hardware, together with anger at a global semiconductor shortage due to soaring demand for mining hardware for both farm and individual use.

Another problem is the concern about market manipulation by Bitcoin ‘whales’ – the term used to describe small cabal of investors who can influence its price at will.

Despite all this, so far Bitcoin has weathered the storm.

However, there’s potentially a lot more turbulence to come now that Government’s around the globe are taking a closer look at Bitcoin.

Related link: What are the most environmentally friendly cryptocurrencies?

Why it might not be too late to buy Bitcoin

Bitcoin has certain advantages over other cryptos:

• It’s supply is limited to 21 million adding relative scarcity to the investing equation, especially given the fact that many of these coins have already been lost forever.
• The blockchain protocol it’s based on offers – at present – an unhackable ledger which can never be altered, unlike other forms of bookkeeping.
• These days Bitcoin is seen more as a store of value – like gold – rather than as a currency for everyday transactions. In many ways it’s superior to gold because it can be sent anywhere in the world in seconds. However, critics would argue that it has no intrinsic use, unlike precious metals.
• It has first-mover advantage, with even its name often used as a generic term for crypto in a similar way to how we all ‘Google’ something, no matter which browser we’re using, and we all ‘Hoover’ our carpets (in the UK anyway!).

In terms of advantages or disadvantages, crypto should be viewed as an alternative asset class, albeit a high risk one.

There are now thousands of digital currencies in existence and many of them won’t survive, but it’s clear that the underlying blockchain technology is here to stay in some form or another.

Just like stocks and shares, Bitcoin’s price will be impacted by world events, such as war, economic conditions, unemployment, interest rate changes… the list goes on.

But in Bitcoin’s case, the swings are amplified, making it a hair-raising roller coaster ride for investors.

Should I invest in crypto right now?

There are myriad reasons for the price of Bitcoin to go up or down, such as global events and interest rates changes.

If things take a negative turn people often people panic and sell their investments, even if it means making a loss.

But this is often the worst thing you can do, and some would argue that investors should be scooping up crypto at what could be considered a discounted price.

A phrase that’s often used by financial advisers is ‘time in the market rather than timing the market’. This is key to successful investing over the long term.

Trying to time exactly when to enter or exit a market is nigh on impossible, whereas holding (or hodling in the case of Bitcoin) firm and weathering market turbulence is like to reap dividends over time.

So is it too late to buy Bitcoin? Some will say no, it’s cheap, while others will say yes. Then there’s those that will be saying yes in five years’ time when it’s reached its next ATH!

Alternatively, they’ll be grinning smugly when the price has crashed to $0.

Like any investment, do your due diligence and never invest more than you can afford to lose.