After the phenomenal year that Bitcoin displayed last year, many investors are looking to enter the market. While the word on the street is that you “should’ve bought a year ago, but the second-best time is now”, many are left wondering, “when should I buy Bitcoin?”. We’re here to help. Let’s run through all the probabilities, and the reasons supporting why now is as good a time as any.
A Recap Of Bitcoin’s Recent Price History
While we know the original cryptocurrency went on a massive bull run last year, let’s look more closely at the investment value. Let’s say you invested $1,000 in Bitcoin on 1 January 2020, just over a year later that same investment would be worth $4,499 (at the time of writing). Better yet, if you’d put your money in during the Black Thursday global market crash in March, you would be sitting with $6,498 today. Looking at the start of this year, the numbers aren’t as exorbitant but are still worth writing home about. $1,000 on 1 January 2021 would have seen returns of $116 just 25 days later.
After the March crash, the cryptocurrency steadily made its way back up, far exceeding expectations and reaching a new all time high on Cyber Monday. It didn’t stop there. As more companies pledged their reserves into the highest valued cryptocurrency, more retail investors followed suit. The price continued climbing, eventually hitting its latest all time high on 8 January 2021 at $41,941.56. (At the time, your $1,000 1 January 2021 investment would have been worth $1,449.) The price has since corrected.
The past year saw an incredible run for Bitcoin, one for the history books, but as with any openly traded asset class, it too is subjected to boom and bust cycles. Wondering if it’s too late to buy Bitcoin? It’s worth remembering that while those numbers look great, they were experienced after two years of what has now become known as the “crypto winter”.
Bitcoin’s Previous Bull Run (2017)
The crypto winter fell upon us following the previous bull run at the end of 2017. Opening the year at $970, the price hit the $1,000 mark in February and the $2,000 mark in May. It didn’t stop there, by August the BTC price had doubled again to $4,000, crossing the $10,000 threshold in November – prices never witnessed before. On 17 December 2017 Bitcoin reached its previous high of $19,783. Then in came the cold.
In 2018 the price went down as quickly as it went up, falling to $7,000 by February. It bounced back up to $11,000 in March before retreating gradually to $3,500 come December. Crypto winters aren’t for the faint-hearted. On the bright side, if you’d invested $1,000 on 1 January 2017 you would still have seen gains of 250% (and 1,800% if you’d sold at the peak).
What can the previous bull run teach us about this one? And how is this one different from the last one?
What Is Behind Bitcoin’s Latest Bull Run (2020)?
The main contributing factor to the most recent ascent in BTC price is the unbelievable institutional interest in Bitcoin. From publicly traded companies to mutual funds, there has been a sharp incline in the number of companies that have put their name behind the nascent currency. Let’s look at a few:
GrayScale Investments
According to reports given to the U.S. SEC, in January 2020 the company had already accumulated 643,801 BTC, around $20 billion at the time of writing. That accounts for almost 3% of Bitcoin’s circulating supply.
PayPal
The company announced last year that it would be supporting several cryptocurrencies as payment options within its online payment service. On 11 January 2021 PayPal traded over $242 million worth of cryptocurrencies in just one day.
Marathon Patent Group
The publicly-traded company bought $150 million worth of Bitcoin in January 2021.
MicroStrategy
Another publicly-listed asset management company was one of the first to declare its allegiance late last year. The company, through two instalments, has acquired 70,470 BTC, valued at roughly $2 billion today.
BlackRock
The world’s largest asset manager has announced that they will be including Bitcoin futures in their two most recent funds. BlackRock deals with $8.7 trillion in funds, to put its influence into perspective.
Massachusetts Mutual
This typically conservative insurance company currently holds $100 million in Bitcoin.
While the last major bull run was driven by retail investors, this one has huge corporations behind it, indicating a more solid and measured approach. With these types of companies investing in the digital currency, we witness Bitcoin as being a more mature market. The billionaire hedge fund manager, Paul Tudor Jones, likened Bitcoin to an early investment in Google or Apple, while Ray Dialo, another hedge fund manager, changed his tune about Bitcoin calling it a gold-like asset alternative in December 2020.
Even Visa and Mastercard are looking into crypto transactions, indicating that Bitcoin has well and truly entered the mainstream financial world. Wondering what to expect from 2021? CEO of Binance, Changpeng Zhao (CZ) commented: “It took three years for Bitcoin to recover from the 2017 peak. And now we’re in [price] discovery, I think BTC is going to go another 5x, 10x, 20x, we don’t know. And if that happens, it’s going to take a couple of years.”
So, When Should I Buy Bitcoin?
The time many would say, is now. Do you own market research and contact a financial advisor (this is in no way financial advice). Get started with as little as $20 and easily buy Bitcoin and other cryptocurrencies using a wide range of payment options, including bank transfer, credit or debit card, on Oobit.
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