Experts explained how potential investments in the first cryptocurrency are in the long term, and also gave recommendations on buying an asset and storing it
In the last five years alone, bitcoin has grown by more than 7,500%. The $100 invested in the first cryptocurrency in 2016 could bring almost $75 thousand in profit. In April of this year, when the price of bitcoin peaked at $64 thousand, the profit could be more than $105 thousand. Experts of RBC-Crypto explained why, with the right approach, investing in bitcoin can replace retirement savings.
The choice is justified
At the moment, bitcoin is one of the most promising assets for long-term investments, says Nikita Soshnikov, director of the cryptocurrency exchange service Alfacash. According to him, investors are attracted by the limited issue of cryptocurrency against the background of the negative impact of quantitative easing on fiat.
“The attractiveness of bitcoin is enhanced by the digitalization of the payment market and support from such large companies as Tesla,” the expert noted.
Bitcoin is still a very young asset, which has a promising future, the financial analyst of the crypto exchange is sure Currency.com Mikhail Karkhalev. He believes that the deflationary model, as well as the ever-increasing demand for bitcoin, will lead to an increase in its value in the future.
How to invest in Bitcoin
The most profitable is the purchase of the first cryptocurrency during the “crypto winter”, explained Soshnikov. According to him, the “crypto winter” comes after bitcoin realizes its growth potential against the background of halving. During such periods, the value of the asset is reduced to the minimum levels. The last “crypto-winter” was observed in 2018. Then bitcoin declined to $3 thousand after rising to $20 thousand at the end of 2017.
Halving is a twofold reduction in the reward for the extracted block, which occurs once every four years. Initially, miners received 50 bitcoins, in 2012 this number decreased to 25 coins, in 2016 — to 12.5. On May 11, 2020, it decreased to 6.25 bitcoins. Halving occurs every 210 thousand extracted blocks. The next halving is scheduled for 2024
If there is no large capital for investment, then you can buy the first cryptocurrency on a monthly basis for small amounts, Karhalev recommends.
“You can save $10-$100 a month in bitcoin. In 10-15 years, the capital will be solid, ” the financial analyst of the crypto exchange explained Currency.com.
If you have a significant capital, you can buy bitcoin during corrections, since it is better to enter the asset as quickly as possible, Karhalev added.
Long-term storage of cryptocurrency
If the goal is to invest with a prospect for several years, and not exchange speculation, then the ideal option would be to withdraw bitcoin to a “cold” wallet, says Karhalev. The director of the cryptocurrency exchange service Alfacash also agreed with him, adding that “cold” wallets exclude the possibility of stealing coins through the network.
“Hot” wallets are called that have a permanent Internet connection. Such wallets are used if there is a need to make transactions frequently. “Cold” wallets store cryptocurrency without an Internet connection, so there is practically no risk of hacking them.
Experts have named several security rules for storing bitcoin:
The “cold” wallet must be connected to the Internet as rarely as possible and only for updating the blockchain;
Split the seed phrase that is used to restore access to the wallet into several parts;
Store the seed phrase in several different places and have a printed copy of it;
Do not spread about the availability of cryptocurrency, its quantity and methods of storage.