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With traditional banking in trouble, bitcoin benefits and risk sentiment have turned bullish. At the macro level, things are neutral. BTC has largely been untouched by the bearish sentiment caused by Silicon Valley Bank and Credit Suisse troubles in the US and Europe.
Despite the view that the market underpins Fed hikes, if you are an investor, this could be a great time to buy Bitcoin. Risks such as a global recession, however, remain on the horizon.
Bitcoin is in a bullish macro environment. According to our analysis, Bitcoin’s on-chain/flow metrics are very bullish. Our overall outlook is bullish. So, if you want to purchase Bitcoin in the next two to four weeks, now may be the right time.
Why a Surge is in the Air
The Goldilocks market regime is one of the primary drivers of the rise in Bitcoin prices. As soon as Silicon Valley Bank’s failure last month was announced, the price of Bitcoin shot past $25,000, reaching a level it hadn’t hit since June.
Bitcoin supporters seized on the price rise to argue that investors were converting traditional currencies to digital ones because of the banking crisis. According to analysts, the surge in Bitcoin’s price will be driven by several financial trends rather than the philosophy of the technology.
Among the reasons for the surge are;
- Federal Reserve interest rate hikes may pause because of growing optimism
- So-called stablecoins, or cryptocurrencies designed to maintain a $1 price, are creating safety concerns.
Crypto research firm Kaiko says Bitcoin’s recent rise is also because of low liquidity, a measure of how easy it is to buy and sell digital assets without affecting their price. Since the crypto market crashed last year, fewer large financial institutions have purchased and sold Bitcoin, reducing its trading volume.
“It doesn’t mean that because there’s a big price move one way that this is a whole new wave of institutional money or anything like that,” said Conor Ryder, a research analyst for Kaiko. “It’s more so a liquidity issue.”
Is Bitcoin a Good Investment for You?
Investment strategies require a large amount of research and risk to feel confident. Cryptocurrency market volatility makes Bitcoin a riskier investment, but one that can pay off handsomely.
With Bitcoin’s long history, good trading volume, and profitable volatility, it’s an excellent place to start if you want to get into cryptocurrency trading. Besides, a Bitcoin investment can diversify your portfolio, though most experts recommend investing less than 5% in cryptocurrency.
The long-term profits from Bitcoin can be substantial if you buy and hold onto it. The Bitcoin you buy today may gain more value and purchasing power as more people buy and use Bitcoin.
In addition, buying Bitcoin when the price is relatively high can be a wise investment.
Investing in Bitcoin: Things to consider
Because of its “boom and bust” cycles, Bitcoin is volatile, leaving many to wonder whether it is a safe investment. In addition, they do not regulate it as conventional investment products like stocks and mutual funds. Furthermore, Bitcoin has no intrinsic value and is purely speculative.
To ensure your investment aligns with your financial goals:
- Consult a financial planner who can assist with determining how much and which cryptocurrency to invest in.
- Don’t invest everything you have. Cryptocurrencies such as Bitcoin should not exceed 5% to 10% of your portfolio.
- Make sure you invest only the money you can afford to lose.
- Consider cryptocurrency investment for the long term, as you would other traditional assets.
- Study Bitcoin’s volatility before investing.
- Research the best time to buy or sell to maximize your Bitcoin investment.
Although Bitcoin prices are declining today, one never knows what lies ahead. Be prepared for a bumpy ride if you consider investing in Bitcoin or holding your position.
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