One of the most often heard questions is whether Bitcoin is a good investment. Following some of the recent price swings, one might not think so. Looking at the bigger picture, the answer has always been “yes”.
Honestly, Is Bitcoin a Good Investment?
When making any financial commitment, it is crucial to maintain the right mindset. Although cryptocurrencies are notoriously volatile, that doesn’t mean they will lead to immediate riches either. There is money to be made by trading cryptocurrencies, but there is also a lot of money to be lost.
Investing in Bitcoin requires a long-term commitment. That also means all information needs to be put in its correct perspective. Judging by the first half of 2020, Bitcoin is a good investment. Many of its core metrics have improved, even if it hasn’t affected the price directly.
Those statistics have very little to do with the current price, market cap, or trading volume. All of those metrics are very popular, but they tell only a current representation of Bitcoin’s tale. What has happened before, or what may happen in the future, can’t be derived from those values in the slightest.
Investigating the Social Aspect
Is Bitcoin a good investment if no one would talk about it? Probably not, but that isn’t an issue where this currency is concerned.
Determining the future value of any cryptocurrency is always a guessing game. As such, answering whether Bitcoin is a good investment isn’t a simple yes or no matter. It all depends on what one expects, but there are some social-related statistics that could indicate what the future may hold.
Bitcoin is the world’s leading cryptocurrency. It dominates the social volume, social engagement, social contributors, news volume, and shared links spectrum by quite a margin. This is only normal, as most altcoins derive value directly from Bitcoin’s momentum.
What has decreased over the past 6 months, is Bitcoin’s social dominance. It still represents nearly 79% of all social discussions pertaining to cryptocurrencies. However, it used to overshadow the entire altcoin market until the beginning of 2020.
That is a good trend, despite the decrease in percentile. As people grow more interested in other crypto assets, they will automatically be exposed to Bitcoin as well.
Volatility Curve Flattens
Is Bitcoin a good investment if it keeps having wild price swings? No, but that doesn’t seem to be any cause of concern right now.
From a technical point of view, Bitcoin almost appears to be in an accumulation phase on the market. Since the beginning of January, there has been an ongoing decrease in overall market volatility. This trend has become more outspoken since early June of 2020.
Lower volatility means far fewer big price swings. At the same time, it confirms that no one is pushing the market much lower for an extended period of time. A price swing of 1-3% is fairly normal for Bitcoin, but those 10-20% swings haven’t been seen for a little while now. In theory, this should hint at a future price rise. When that will happen exactly, remains to be determined.
Active Development Around the Clock
Is Bitcoin a good investment if the project would no longer be maintained? Absolutely not.
Thankfully, there are nearly 700 contributors who keep an eye on Bitcoin’s code, come up with potential improvements, and ensure any bugs are addressed as quickly as possible.
For a project that is over 11 years old, there is still plenty of code upkeep. Moreover, Bitcoin has plenty of room to improve in the future. Thanks to these hard working contributors, as well as the thousands of network node operators, the network runs as smoothly as it has ever done.
Liquidity is top Notch
Is Bitcoin a good investment if there aren’t sufficient people willing to buy or sell BTC? It would certainly make it scarce, but not for the right reasons.
Looking at the liquid marketcap statistics by Messari, Bitcoin checks the right boxes. Its liquid marketcap sits at just under $168.5 billion. This means that there is plenty of value to be traded back and forth, assuming users are willing to buy and sell at current prices.
In terms of other metrics, Bitcoin dominates the scene as well. It has the highest transaction volume and number of active addresses on the market today. More importantly, it has the second-highest real trading volume, behind Tether’s USDT. That is normal, as this stablecoin can be traded against almost all cryptocurrencies on the market.