How should you invest in Bitcoin (or any other currency for that matter)? That’s an important question. If you’re interested in investing in Bitcoin but don’t know how or where to start, then this article will give you what you need.
But there’s more. I’ll also tell you how to take advantage of a volatile cryptocurrency market by using one simple, scientifically proven technique. Oh, and I’m giving this information away for free.
That’s a unique proposition. Why? Because there are a lot of scammers and self proclaimed ‘gurus’ out there selling this program or that program. The only people they’re making rich is themselves.
But if you want to invest in Bitcoin and do it smartly, this is the article for you. Keep reading to find out more.
In this article I’ll tell you about a simple technique to invest in a volatile market like Bitcoin
A Brief History of Investing in Bitcoin
I’m not going to labour this point. After all you probably don’t care about the ins and outs of how Bitcoin came about (if you do, read this). But what you should understand are the three phases:
Phase 1: The Pioneers
These guys (and gals) were the original early adopters of Bitcoin. They jumped right in with two feet, either because:
A) They had an incredible appetite for risk.
B) They saw something of potential worth that others didn’t (in the financial world, this is called Value Investing).
In the recent market peak at the end of 2017, when Bitcoin reached over $18,000, these people were rich. And I mean really rich. Assuming they hadn’t sold their Bitcoin when it reached $30 back in 2011.
Phase 2: The Speculators
Imagine a gold rush. First the pioneers break ground and find the gold. And then who shows up? The speculators.
This is when Bitcoin went mainstream. And it’s also when it peaked. Thousands and thousands of people all over the world started to invest and global markets started to take note.
Thousands started to day trade Bitcoin and a whole raft of other crypto currencies came to the fore, include the very successful Ethereum.
Many people bought in for the first time (including me) and saw their initial investment skyrocket. It was an exciting time.
Since the rise of Bitcoin, other cryptocurrencies have become popular with investors including Ethereum.
Phase 3: Bitcoin Market Adjustment and Correction
Financial markets and exchanges have a certain rhythm to them. No, not like the rhumba. Instead they ebb and flow like tides (poetic, huh?). This rise and fall are categorised as Bull and Bear markets.
A Bull market is when everyone is feeling confident and wants to buy. A Bear market is when investors are more cautious and less likely to buy with wild abandon.
Think of it like this: Bulls are reckless and charge around where as bears like to sleep a lot and hide in the woods.
Sure it’s not a perfect analogy but it helps me remember the difference.
That’s where we are now: Phase 3. It’s early 2018 and the market is beginning to shift down. It’s still waaaaay above where Bitcoin was a year ago, but we’re not singing the high notes of late 2017 either.
We’ve come down from the highs and Bitcoin is now trading closer to it’s true value. That’s known as a ‘market correction’.
One Simple and Legal Technique to Invest in Bitcoin
There is one way to invest in Bitcoin which will is the safest way to ride the ups and downs of the market. It’s not new and has been used by stock market investors for decades.
It’s called ‘Cost Averaging’ – sometimes called dollar cost averaging or point cost averaging (or drachma cost averaging – though I’ve never heard this and I might have made this up).
Cost averaging into Bitcoin means you buy a fixed amount at regular intervals over a long period of time. This means that your ride highs and lows of the market and assuming it goes up, your investment will too.
Pro-Tip: If you don’t think the value of Bitcoin will go up over time, you shouldn’t invest.
An example would be buying $50 of Bitcoin once a month. Sometimes you’ll buy low, sometimes you’ll buy high, but over time your investment will increase in value.
The key phrase here is ‘over time’. Doing it for 6 months and then quitting ‘cos you lost money’ won’t work. We’re talking 5-10 years of a long time.
The same goes for any crypto currency. With the market adjusting and contracting as it is now, cost averaging means you can spread the risk and still invest.
How Should You Invest in Bitcoin?
So then, how should you invest in bitcoin. The answer is simple. By using the tried and tested technique of cost averaging. It might not be very ‘rock n roll’ but it is the best chance of seeing your investment grow over time.
If you’re interested in investing in Bitcoin, I recommend buying from Coinbase. If you click this link and invest $100 (£71) you’ll get $10 in Bitcoin as a bonus (so do I).