Will Bitcoin, other cryptos defy law of gravity or sustain growth?
Many Nigerians and other discerning investors across the globe are always looking for smart opportunities to quickly turn over their resources or grow their wealth. Bitcoins and cryptos, on the face of it, seem to present the way to that desired Eldorado!
The seemingly unstoppable rise of Bitcoin has continued with the cost of a single unit of the digital currency now standing at a jaw-dropping $59,000. This time last year, it was less than $20,000 and falling.
Retail consumers, immigrants and amateur investors all over the world are caught up in the Bitcoin frenzy. Many young and vibrant Nigerians have been found in web of investment in the digital currency, making Nigeria one of the world’s biggest investors in the currency.
A bigger reason for the massive price rise is that there has been a big influx of investors from large-scale institutions such as pension schemes, university endowment funds and investment trusts.
Tesla’s iconoclastic chief executive Elon Musk also got on the bitcoin train earlier in the year, purchasing $1.5 billion worth of Bitcoin and confirming acceptance of payments in the crypto. A possible Bitcoin crash is not a deterrent.
Additionally, because Bitcoin is in limited supply, it is seen as a hedge against inflation.
In Nigeria, most investors are piling up investment in real estate, which seems to be the only major investment option in face of rising inflation, depreciating local currency, and low yield regime in the fixed income market.
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The Bitcoin option became popular in Nigeria, especially during the #endsars protest when sponsors of the mass movement against police brutality raised huge sums via crypto to fund the operations.
A number of youth, as a result, were lured into investing in the digital currency, having been exposed to the benefits and gains inherent in the virtual investment assets.
Bitcoin’s lure is irresistible. People jump in to make money as they see the price climbing, further driving up the price. They panic when prices slip and they quickly sell. What a fine recipe for heart attack!
Bitcoin price crash history
Bitcoin’s price has crashed many times and seen multiple bubbles in a short history.
In 2011, Bitcoin jumped by 3200% from just $1 to $32
Later that same year, the price crashed by 93%
In 2013, it moved from $13 to $.220. By April it collapsed to $70. And by December it was up again to $1156
Up and down from 2015-2017
2017 saw the biggest move, flying from $1000 to $20,089
Slumped from 2017-2019
2020, the year of the pandemic, Bitcoin skyrocketed from $7200 to over $32,000
Now in 2021, and towering at almost $60,000, Bitcoin history is still in the making. The big question as always, remains will Bitcoin price crash or will it continue to set new records?
Should you as a newcomer entrepreneur dive into the Bitcoin market now for Fear of Losing Out (FOMO)? Or should you just let this jet train quickly pass by?
The counsel is for you to try the best of both worlds and find the sweet spot between safety and opportunity. Allocate only a portion of your portfolio to Bitcoin. Forbes’ Taylor Tepper suggests a max of 10 percent.
Still, itching for the Bitcoin action? It’s worth remembering that whatever goes up will come down. Who knows whether the law of gravity will make an exception with Bitcoin.
~Adapted from the story in The Business Immigrant; Bitcoin and Cryptocurrencies – Buy Now, Beware or Walkaway?