Reason to Invest in Bitcoin on 2022
The traditional finance industry must embrace cryptocurrencies to continue to function. Your decision to invest in Bitcoin depends on your risk tolerance and perspective on humanity. Russia has stated that it will look into cryptocurrencies as a way to reduce its dependency on the US Dollar. Bitcoin has the potential to completely disrupt the US Dollar and other fiat currencies. Whether not you invest in Bitcoin in 2022 is up to you. Just keep in mind that the cryptocurrency market is highly volatile and speculative.
Bitcoin is a safe have
The ongoing coronavirus crisis has rattled the global financial system and caused great turmoil. As people face unprecedented health and economic risks, they are looking for safe-haven assets to invest in. Many people are diversifying their portfolios with Bitcoin and other cryptocurrencies to minimize risk. However, others say Bitcoin is not a safe haven asset. What are the pros and cons of investing in Bitcoin? Let's take a closer look.
It is a store of value
As the world becomes increasingly dependent on oil, whether Bitcoin is a store of value is gaining importance. Oil prices have increased and people have traded their fiat currency for it. People in Russia and Ukraine have been trading domestic fiat for cryptocurrency to hedge against rapid inflation. But is the world ready for Bitcoin? Will it survive the current economic crisis? Or will it be left behind in the long run?
It is volatile
If you are wondering why Bitcoin is so volatile, you are not alone. The price of cryptocurrencies can fluctuate dramatically, reaching a high of $70,000 only a few years after its inception. This phenomenon is often attributed to intense sell-offs that cause the price of cryptocurrencies to plummet. The destabilizing effect of such events on derivatives markets has an adverse effect on other markets as well. Bitcoin has experienced high volatility on Thursdays, and these fluctuations can be seen in the market as a whole.
It is a risky investment
While many investors will say that bitcoin is a risky investment in 2022, this is not entirely true. In fact, it's actually a great time to buy cryptocurrency, and a huge boom could occur if the price continues to rise. Currently, there are six major cryptos with high ceilings, with the others having less institutional backing. In addition, there's also the possibility that some countries will ban bitcoin to protect their fiat currency.
It is a high multiple-tech stock
It is hard to make a convincing case for the bullish case for Bitcoin in 2022, but we are not yet out of the woods. Bitcoin is an incredibly cheap stock relative to other high-growth stocks. This bullish case is dependent on innovative tech. The selloff has already priced in the worst-case scenarios. The group itself remains at a decent value relative to other stocks. Moreover, rising interest rates and uncertain economic recovery are headwinds. Lastly, we have the threat of the disruptive Omicron Covid disruption. All of these uncertainties could create a macro growth scare, and that may not be favorable for Bitcoin.
Tim Moseley