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Is Bitcoin Still Affordable in 2020?
With a 160% year-to-date surge, there is one question that every investor has in mind: is Bitcoin still a bargain considering the current economic situation?
Bitcoin’s price jumped from $10,000 to $18,000 from October to November. While the surge is a promising sign for previous investors, what's in it for new traders? The massive increase makes it look as if Bitcoin has become too expensive. Does that mean new investors shouldn't think of investing in Bitcoin anymore? That's not the case. Bitcoin's pre-programmed deflationary mechanism and various macroeconomic factors may make this digital asset more affordable than you think.
Bitcoin's market value
The best way to find out about any cryptocurrency's latest market value is to follow the news. Bitreporter provides updated cryptocurrency news so that you can trade wisely and get high returns. As of October 2020, Bitcoin's market cap is nearly $220 billion. On the other hand, the market cap of the entire crypto market is $370 billion. The record cap is $800 billion in 2017 during the peak of the crypto bubble.
Gold, for example, has a market cap of $12 trillion. You may say that Bitcoin's market cap is overvalued, but you also need to consider the crypto market compared to gold. When more people enter the crypto market again, it wouldn’t be a surprise to see cryptocurrency prices skyrocket.
History and market cycles
If you go through Bitcoin’s market history over the last ten years, you will observe several points. First of all, it's a volatile currency. Bitcoin sees a double-digit percentage within a matter of minutes when the market is favorable. But there are instances of price dives as well. However, the price surges always come out on top. Bitcoin is the only currency that has seen an ROI of 8,900,000%. In history.
Apart from short-term price movements, Bitcoin tends to move in extensive cycles. This means the subsequent process lasts longer than the previous one.
Bitcoin is today's economy.
Bitcoin came at a time when the world governments were facing a significant financial crisis. The situation was so out of hand that governments initiated large-scale money printing. This proves how demand and supply play a crucial role in pricing an asset. Bitcoin used this concept to its advantage. It has pre-programmed its total number of coins to 21 million instead of providing an unlimited supply. Moreover, it also has a pre-determined rate for the new tokens and doesn’t rely on any central authority to take charge.
Why is this beneficial for today's economy? As Bitcoin's supply decreases over time, it also reduces the inflation rates. Therefore, when governments meet with a financial crisis, such as the COVID-19 situation, they can print any fiat currencies whenever they want. This will depreciate the value of that currency against other currencies but would eventually increase the inflation rate. This means the presence of Bitcoin is balancing the financial situation instead of pushing it downhill.
What do all these things mean if you want to know whether Bitcoin is still cheap in 2020 or not? It certainly is, provided you hold on to your assets for dear life and wait for the market to improve in the future. If you can do that, don't hesitate to invest in Bitcoins.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes