Is Bitcoin a Good Investment in 2023?
Is Bitcoin a Good Investment? A Detailed analysis
- Bitcoin is the first cryptocurrency and was built on Blockchain Technology. It uses the concept of proof of work to reward its members.
- Bitcoin uses a peer-to-peer network and does not have any central authority.
- The Bitcoin ledger is public and any person can store it on their computer. Anyone can create a Bitcoin token and can be transferred to any of the wallets however, the owners of bitcoin addresses cannot be identified, but any Bitcoin transaction made can be accessed by anyone, anywhere.
- No approval is required for the completion of a Bitcoin transaction. It is done by the network itself without the interference of any third-party system.
- It is a limited resource of 21 Million Coins of which 19.1 Million are in supply
- Competitors of Bitcoin: Ethereum, Gold, National Currencies
There are many who think Bitcoin is actually of zero value. However, given its limited supply and increasing usage for payment, it does have value
Bitcoin Use Cases
There are 2 major use cases for Bitcoin at the moment. This is different from use cases for Blockchain which is much more widespread.
- Store of Value: In Layman’s language, Bitcoin is like Gold hidden inside a computer network instead of a mine in Africa. The creator(s) deliberately created a limited number of them and created a whole range of difficult tasks to get them. Just like in real gold mining, Bitcoin mining becomes difficult if more people mine at the same time or as the number of BTCs keeps reducing. That said, It cannot be used as ornaments, one of the big factors that drive Gold value. To solve this problem, the creators designed it in the form of a currency that is authenticated via a blockchain.
- Payments: Over the last few years, BTC has increasingly been used as an alternative to the US Dollar or other National Currencies. It is now accepted on payment by many companies around the world. While BTC enjoys the absence of central control and therefore any form of voluntary devaluation, it suffers from more volatility.
Bitcoin: Historic Performance
Bitcoin has delivered positive returns for most of the last 10 years.
- Bitcoin has delivered positive returns in 9 out of 11 years
- 2018 was the most difficult year which also coincides with the year the Federal Reserve reduced the size of its balance sheet. During that year, Bitcoin closed 74% lower than the previous year. It took Bitcoin 3 years to recover.
- Unlike Alts or even Ethereum, Bitcoin has been there for a fairly long time and with a record of proven performance.
- Gain Years: 2011,2012,2013,2015,2016,2017,2019,2020,2021
- Loss Years: 2014,2018,2022
Bitcoin vs Ethereum, Quarterly Performance Comparison
- Q1: BTC (-3.1%), ETH (-8.2%)
- Q2: BTC (-58.5%), ETH (-54.4%)
- Q3: BTC (-2.8%), ETH +25.8%
- Q4: BTC (-19.1%), ETH (-18.2%)
- YTD: BTC (-67.1%), ETH -71.1%
On a long-term basis, Bitcoin has performed more consistently than Ethereum. However, over the last 3 years, Ethereum has outperformed Bitcoin.
Some people compare Bitcoin to the Tulip Mania, while others relate it to the Dot Com Bust. However, both the Tulip Mania and the Dot Com bubble lasted around three years. Bitcoin has been repeatedly tested in this contemporary era of computers and boom and bust cycles over the previous 12-15 years. So, the comparison is false, and Bitcoin will rebound.
Is it the right time to buy Bitcoin?
CrowdwisdomLIVE Buy Sell Indicator*
- Current Momentum: Negative
- Competitive advantage (Liquidity): Moderate
- Short-Term Trading Recommendation: Sell
- Long-Term Investment Recommendation: Hold
At the moment, it is not advisable to purchase Bitcoin
Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.