Bitcoin (BTC) became the first digital asset, and initiated the current ecosystem of cryptocurrencies.
The release of a document describing the technology in 2008, after the global financial crisis, gave some push to the development of cryptocurrency. Initially, investors viewed BTC as a possible replacement for the physical monetary system. While cryptocurrency hasn't replaced fiat (yet), digital assets have firmly established themselves in the financial world. Bitcoin is often called the best investment of the decade. After all, it took a little more than 10 years to go from a "ridiculous" price to $67,000.
But should you buy Bitcoin in 2022? Many fear that the "golden" moment has already been lost. Others are confused by the sharp drop in price and the fear that BTC will no longer go up.
Let's figure it out together.
Why did bitcoin fall in price?
On November 7, 2021, Bitcoin reached its all-time maximum of $67,549. The average price for October 2022 is $20,000. What is it connected with?
1. Bitcoin is a risky asset
Until recently, Bitcoin was considered to be a store of value that was fairly unshakable to fluctuations in the value of risky assets. In 2022, this ceased to be true. The cryptocurrency market is affected by various economic phenomena: inflation, stock markets, and the Fed monetary policy. According to Kaiko, by June 2022, Bitcoin reached its maximum correlation with the leading stock indices S&P 500 and Nasdaq 100, indicating its high-risk nature.
"In total, investors are showing more interest in value investing and less interest in speculative stocks and alternative investments," - says Alex Reffet, CEO and co-founder of East Paces Group.
The second point follows from the first point.
2. Inflation and the rate of the Federal Reserve System (the Fed)
The Federal Reserve System is a purpose-built independent federal agency that oversees the US commercial banking system, and therefore the dollar.
Their main tool is the base rate. A change in this rate affects both banks and the stock market, and affects the value of assets, including Bitcoin. When interest rates rise, banks increase lending rates, and investments become more expensive. In such a difficult environment, investors are choosing assets with predictable income, such as government bonds, rather than volatile bitcoin.
3. The market is cyclical
The market is cyclical - after a big rise, a big fall was coming for us. But it also works in reverse, so some experts expect the price of Bitcoin to rise up to $100,000.
Is Bitcoin a good investment in 2022?
Depending on what your goal is. If you want to make a profit in the short term, then BTC is not the best option right now. The price increase is expected in the long term: if you buy BTC now for $20,000, then by the end of 2023 - the beginning of 2024, you can make a good profit. Let us remind you that some experts predict that the token will rise up to $100,000.
But do not forget the golden rule while working with cryptocurrency: invest the money you are ready to lose. After all, digital assets are volatile, and forecasts can change.
Where to buy Bitcoin?
Any.Cash is a multi-currency cryptowallet in Telegram with an exchange function. If you know how chat-bots work, then think that you already know how to buy Bitcoins there. Easy functionality, low fees and safe storage are all you need to buy BTC. Follow the link to start your journey with the crypt.
