Bitcoin is easily the most recognizable cryptocurrency globally and has recently proven to be a consistently challenging asset for hedge-fund managers and intrepid investors to track successfully. The past decade has seen Bitcoin experience exponential gains, bolstering its popularity – but for every few gains, the crypto also suffered plenty of drawbacks which have blown many a portfolio out of the water.
Every few years or so, Bitcoin retraces around 80% of its value over a long period in a newly-coined event commonly known as a crypto winter. This event is enough to steer wary investors away, at least for a time. But even after these extended bear markets, Bitcoin always manages to find its way back into the mainstream with some truly monstrous gains.
There is no doubt that this cycle may yet continue for some time in the years to come. Bitcoin seems to be synonymous with volatility currently. But do the potential gains justify the risks? Will Bitcoin go back up once again in the near future?
Here at Capitalist Exploits, we have got all the information you need. Short of a crystal ball and some tea leaves, we have the best insights into this unpredictable cryptocurrency that will set you on the right course. So we are going to take a look at whether Bitcoin will go back up and whether you should invest in it or steer clear. Let’s get right to it!
Bitcoin is a Bubble
Once every four years or so, the block reward for mining Bitcoin is cut down to approximately half of its initial value. This event is commonly referred to as “The Halvening.” It is the catalyst for a reasonably predictable supply crisis, which in turn leads to the creation of another market cycle – called a “Bubble.”
The four-year market cycle pattern has been readily accepted by almost everyone in the community, providing a means of predicting each bubble. However, data scientist Benjamin Cowen has a different theory in mind, which may have some stock.
Cowen suggests that instead of the predictable four-year cyclical pattern, each cycle will grow longer, diminishing returns with each new cycle. Cowen bases his theory on Bitcoin’s innate ability to extend and stay extended, for an exponential amount of time, reaching way past the fair value.
For reference, the 2014 Bitcoin bull run saw two bubbles over the year. A similarly drastic correction quickly followed an initial and drastic price hike. After this hike, there was a period of accumulation, and the coin rose again for a second blow-off top.
Each cycle in the year took noticeably longer to reach its peak while experiencing an evident decline in volatility overall.
Based on the theory put forth by Cowen and the measured results of Bitcoin in 2014, we can safely determine that the current cycle is only halfway through – the best is still on its way and should be coming later on in the year.
How High Will It Go?
Unfortunately, while Cowen’s model has proven valuable in analyzing the results of years passed, we still have no means of determining the peak for Bitcoin in 2022.
That being said, based on Cowen’s research, we speculate that the highest peak Bitcoin can reach will heavily depend on timing. A gradual increase in fair value will allow for a much higher peak than what was initially predicted.
That being said, if the peak occurs in July, the price will likely be much closer to $200,000. As a rule of thumb for the year ahead, the later the peak occurs, the higher the price tends to be.
Is It Profitable?
Investment is a tricky business; of this, we are all aware. No asset is immune to setbacks and losses, no matter how sure you may be. Crypto as a whole is no different, and Bitcoin, in particular, has been notoriously difficult to keep up with or forecast.
Here at Capitalist Exploits, we believe in asymmetric investments; that is to say, we look for assets that can be invested in with minimal risk and high rewards. Bitcoin – on the whole – does not fit this bill.
Considering our approach and the crypto’s fickle nature, savvy investors would do well to keep an eye on it. The potential rewards are tremendous, so long as you keep a close watch on the coin’s performance. Suppose you are genuinely intent on profiting off of Bitcoin. In that case, you will need to dive deep into the research surrounding it (beyond Benjamin Cowen, that is) and pay attention to various newsfeeds, including our own here at Capitalist Exploits.
When dealing with or investing in crypto of any kind, our advice is to buy and sell within short time frames to maximize your profit while keeping your risks at a minimum. Naturally, your realized profits will be much smaller as a result. Still, you can bolster them further by paying attention to market insights and allowing them to guide your decision-making process.
What Metrics Should You Be Keeping Track Of?
When it comes to Bitcoin, there are many factors that an investor needs to keep track of to come out on top. These metrics are constantly fluctuating, so you will need to pay attention if you hope to maximize your profits. Here are the ones that our team considers to be the most pertinent.
Liquidity vs. Volume
Analyzing Bitcoin requires that you pay attention to its liquidity and volume, mainly because you will most likely be trading in crypto pairs. Let’s take a look at what each of these terms means.
Volume refers to the number of pairs that have been traded in a set 24-hour time frame. On the other hand, liquidity refers to the amount of capital available in that market (which is a lot when it comes to Bitcoin).
A high volume of pairs being traded means an equally high level of liquidity. Understanding this industry concept can help you formulate a viable trading strategy.
On the other hand, if you are looking for something with a lower entry price, Bitcoin may not be for you. You will want to consider investigating other cryptocurrencies with smaller caps.
Taking note of the volatility of a cryptocurrency is essential to aid your decision-making process. Bitcoin has proven to be a highly volatile form of crypto, so much so that it has dissuaded many a veteran hedgie from ever investing.
Of course, potential investors should note that all crypto – and not just Bitcoin – is much more volatile than an even stock market. Generally speaking, the smaller the currency, the more volatile the market.
To this end, only dedicated veterans should even begin to attempt investing in a smaller cryptocurrency. Others might be successful with Bitcoin, though you will need to keep all of your wits about you.
New Developments and Announcements
While new developments and announcements are not a metric – that is to say, something that you can measure – they are worth paying attention to if you hope to turn a profit investing in Bitcoin. In particular, you will want to watch out for any adverse developments – these are surefire indications that it may be time to sell. In contrast, seeing positive developments can quickly make your day.
All of this information essentially boils down to the fact that you need to stay up to date when investing in any cryptocurrency, especially Bitcoin. To this end, you should subscribe to our newsletter, where we inform you of any active developments in a wide variety of markets worldwide.
Pros and Cons of Bitcoin Investment
Bitcoin is notorious for being an asset from which plenty of investors has been unable to profit. To better gauge its overall effects, we have devised a list of its pros and cons for you to read while considering your investment.
- Accessibility and liquidity make Bitcoin a favorite among cryptocurrency investors who need something easy to buy into and exchange.
- User anonymity ensures that your personal information is not distributed; these security solutions are also highly flexible.
- Independence from a central authority means that Bitcoin is without borders.
- A high potential for return may be enough to keep you invested.
- Immense volatility makes it a dangerous investment even for veterans.
- The lack of governmental authority also means a lack of governmental regulations.
- Bitcoin transactions are ultimately irreversible.
Our advice for you when it comes to investing in Bitcoin is that you should first seek out guidance and help. You can do this by signing up for Insider or subscribing to Hedgies Uncut if you want a more raw, open view of the world’s most notorious crypto asset. In general, however, a wary eye is needed to make the most out of an investment in Bitcoin.
Proceed with caution. Whenever you look at investing in stocks or cryptocurrency for any company, caution is not a bad thing. So, with the information presented above, you should have more insight into a way forward. You can also contact us for more guidance.