Is Bitcoin a good investment? This post is my point of view on whether it is worth investing in Bitcoin.
Table of Contents
- Is Bitcoin a good investment?
- Bitcoin as an investment?
- Factors affecting Bitcoin investment
- My personal opinion: Is Bitcoin a good investment?
- Final thoughts
[Disclaimer: I am not a certified financial planner. My sharing is purely based on my own research and personal experience. To make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a certified financial planner if necessary]
Is Bitcoin a good investment?
Most probably, you are reading this post because you wanted to start investing in Bitcoin. But, you are skeptical about whether Bitcoin is a good investment.
Because there is a mixture of positive and negative news about investing in Bitcoin and other cryptocurrencies out there.
So, back to the question ‘Is Bitcoin a good investment’?
It depends. Further explanation is below.
What is a good investment for you?
Firstly, you need to have a clear understanding of a good investment. In other words, what is a good investment for you?
Generally, a good investment means something that:
- give you a good return such as investing in a good stock or unit trust.
- give you consistent earnings such as rental income from a property.
- provide guarantee returns such as fixed deposit placement.
- in demand such as gold.
- has the potential for good earnings such as the robo-advisory platform.
Then, you need to be more specific about a good investment. In other words, the potential profits are based on your expectation.
It could be 10% or 15% profit. Or maybe higher at 50% profit.
Personally, this is what a good investment means to me:
- category 1 – a gross profit between 3% to 6% with low risk such as fixed deposit placement.
- category 2 – a gross profit between 6% to 10% with a moderate risk such as a robo-advisor platform.
- category 3 – a gross profit of more than 10% with higher risk such as Bitcoin.
So, have you got your own definition of a good investment? Remember not to use my definition of a good investment. Because this is your investment, your money.
Therefore, go and write down what you think is a good investment. Be responsible for your investment decision.
Bitcoin as an investment?
By now, I assume you know what is Bitcoin such as its origin, Bitcoin mining, Bitcoin halving, what Bitcoin can solve, why Bitcoin is growing in demand, etc.
If you haven’t, invest some time reading about it on Bitcoin.org.
Bitcoin prices can fluctuate really fast and frequently. At some points, it can act wildly bullish, swinging up, down, and up again in a matter of minutes. At other points, it can crash and sink deeply.
And at other times, the price stays still at its preferred point.
To me, it seems like sometimes Bitcoin is taking a long deep sleep to rejuvenate itself. After gathering sufficient energy, it springs to its action. When Bitcoin is tired, it slows down, sometimes taking short naps and other times taking very long sleep.
Now, are you wondering why the Bitcoin price fluctuates so much? Read up on this article by 99Bitcoins, Why is Bitcoin Going Down or Up? What Determines Price?
Many would think the crazy Bitcoin price is too risky to handle. But, some people see great investment opportunities in Bitcoin volatility.
5 different Bitcoin stories
Before we dive in further, let us see some scenarios of investing in Bitcoin. I recreated these scenarios based on:
- my own reading and research about investing in Bitcoin.
- real-life stories shared by people I know.
This can be a long read, but I believe it is beneficial to your Bitcoin investment journey.
Scenario A: Amber and her Bitcoin
Amber bought 1 Bitcoin (BTC) at RM2,000 per BTC on 6 April 2014.
On 15 January 2015, the Bitcoin price dropped to RM1,000 per BTC. Amber panicked it will drop further. So, she nervously sold her Bitcoin at RM1,000 per BTC. She was making a loss of RM1,000 (gross profit calculation).
If Amber patiently hodl (Bitcoin slang for holding instead of selling) her Bitcoin for about 3.5 years and sell it on 17 December 2017, Bitcoin was at its peak at about RM78,000 per BTC, she would have made a gross profit of RM76,000.
And if Amber hodl her Bitcoin and sells it on 1st May 2020, her 1 BTC is worth about RM38,000. That would mean a profit of RM36,000.
For Amber, is Bitcoin a good investment? Definitely a big NO.
Scenario B: Adele and her Bitcoin
Adele is Amber’s best friend. When she learned that Amber is investing in Bitcoin, she took action as well. But, she did her research before starting to invest in Bitcoin.
The wise Adele bought her first Bitcoin on 2 August 2014 at about RM2,500 per BTC.
When the Bitcoin price dropped to RM1,000 per BTC on 15 January 2015, Adele saw it as a buying opportunity instead of panicking. So, she bought another Bitcoin.
When the Bitcoin price soared to about RM78,000 per BTC on 17 December 2017, she missed the opportunity to take a profit.
After much consideration, she sold off 1 Bitcoin at about RM65,000 per BTC on 9 January 2018. Still, she gained a nice fat profit of RM62,500 while still keeping the other 1 Bitcoin.
For Adele, is Bitcoin a good investment? Yes.
Scenario C: Ally and her Bitcoin
Ally is Adele’s colleague. When she learned that Adele is making a huge profit of RM62,500 from her Bitcoin investment, she quickly bought a Bitcoin herself at about RM58,000 per BTC on 18 January 2018.
Where did the money come from? She took the risk of investing her life savings. She’s hoping that the Bitcoin price is climbing higher soon. Then she can sell it for a profit.
Unfortunately, after its peak at about RM78,000 per BTC on 17 December 2017, the highest Bitcoin price after that was about RM59,000 on 9 July 2019.
She missed the opportunity to sell it at RM59,000 per BTC.
And now, she is still holding her Bitcoin, waiting for the opportunity when the Bitcoin price hit more than RM58,000 per BTC to sell off her Bitcoin.
For Ally, is Bitcoin a good investment? Not at the moment but maybe in the future, provided she can hold her Bitcoin.
Scenario D – Adam and his Bitcoin
Adam is Adele’s brother. When he learned that his sister made a handsome profit from Bitcoin, he also started his own Bitcoin investment.
Unfortunately, the exchange where he bought and keep his Bitcoin was hacked. He lost all of his Bitcoin investment.
For Adam, is Bitcoin a good investment? No.
Scenario E – Alex and his Bitcoin
Alex is Adam’s friend. He heard a colleague actively promoting a Bitcoin investment plan that promises a high dividend monthly. He also heard from Adam that his sister made a huge profit from investing in Bitcoin.
So, without further consideration, he immediately sign-up for the Bitcoin investment plan as a downline through his colleague. He invested USD 1,000.
For the first few months, he received his monthly dividend. Fueled by greed, he top-up his investment to USD5,000. A few months down the road, he was not able to log in to the Bitcoin investment website.
And later, he found out it was a Bitcoin scam.
He lost all his Bitcoin investment. Since then, he swears he never wants to get involved in Bitcoin again.
For Alex, is Bitcoin a good investment? No.
Different opinions on whether Bitcoin is a good investment
From the 5 scenarios above, it is clear that different investor in different situation has different opinion about whether Bitcoin is a good investment.
To Amber, Bitcoin is definitely, not a good investment. Because she lost RM1,000 in her first Bitcoin investment.
To Adele, she will gladly say ‘Yes, Bitcoin is a good investment’. Because she earned a gross profit of RM62,500 from her first Bitcoin investment of just RM2,000 in fewer than 3.5 years.
To Ally, she feels she’s been cheated on and misled. Waiting for a Bitcoin rally can be suffering especially if the investment is from a lifetime saving. It is going to be very painful if she urgently needs the money but is unable to cash it.
As for Adam and Alex, both will tell you Bitcoin is not a good investment. Because both had a bad experience with their Bitcoin investment.
So, five individuals with different views about investing in Bitcoin.
How Adele, Ally, Adam, and Alex can turn their Bitcoin investment into a profitable investment?
In fact, Adele, Ally, Adam, and Alex can consider the following moves to turn their Bitcoin investment into a profitable investment:
For Adele:
- do her own study and research about investing in Bitcoin before her next Bitcoin purchase.
For Ally:
- don’t invest lifetime savings but invest only the amount she can afford to lose.
By the way, she may be going to make a profit if the Bitcoin price soars above RM58,000 per BTC. But, the problem is no one knows when it will happen. It could be in a matter of days, weeks, months, or years.
Can Ally let her RM59,000 stay still in her Bitcoin wallet and wait for 5 years or 10 years? What if she urgently needs the money for an emergency?
Worst, what if Bitcoin becomes worthless?
For Adam:
- don’t store his Bitcoin in exchanges.
- learn how to secure his Bitcoin.
For Alex:
- do his own research before starting investing in Bitcoin.
- understand that scammers will use anything as a medium, including Bitcoin.
- acknowledge that scams and Bitcoin are 2 different things.
- know the smell of a scam. When something is too good to be true, it probably is too good to be true.
- don’t be greedy.
Generally, these are some very basic but important things to take note of before you start investing in Bitcoin:
- Learn and read all you can about Bitcoin and how it works.
- Invest only the amount you can afford to lose.
- Have your own Bitcoin investment strategy.
- Don’t be greedy.
- Take profit along the way.
Even though knowing the above does not necessarily guarantee you a huge profit from Bitcoin, it can help you avoid unnecessary loss.
Experiences by others: Is Bitcoin a good investment?
And below are some good readings from others on investing in Bitcoin:
- The New York Times – After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors.
- Stories about a businessman and a teacher trying to make a quick buck from Bitcoin when Bitcoin was riding high.
- Unfortunately, their Bitcoin investment left them financially ruined.
- Irish Examiner – My experience with Bitcoin
- A financial advisor shared his Bitcoin journey.
- Even though he lost 71% of his Bitcoin value at the time of his sharing, he is still positive about investing in Bitcoin.
- The Guardian – Experience: I made $1m on bitcoin – and lost it again.
- Peter McCormack (now a Bitcoin podcast host) shared his experience with Bitcoin investment.
- Medium – 5 People Who Became Rich Because of Bitcoin
- Stories about 5 young early Bitcoin investors who became super-rich from investing in Bitcoin.
Do you want to read more stories on investing in Bitcoin? You can google it. But, make sure you are reading real experiences shared by someone trustworthy.
Factors affecting Bitcoin investment
So, whether Bitcoin is a good investment depends on some of the factors below:
1. Your Bitcoin knowledge
First is how much you know about Bitcoin.
From the scenarios above, we learned that those with good Bitcoin knowledge are more likely to make a profit from investing in Bitcoin.
Personally, it took me a few months of intensive reading and research before my first Bitcoin trade with Remitano.
You too should read and explore as much as possible before start investing in Bitcoin.
2. When you buy it (your purchase price)
To be honest, I always missed out on the best Bitcoin buying opportunity when Bitcoin went down. Because I don’t know when the Bitcoin price is considered the lowest during a particular cycle.
But, that’s OK.
Now, I learn to set up a certain target price. When Bitcoin starts going down, I follow it closely. And when it meets my target price, I will consider buying it.
In other words, to maximize your profit, you should have a plan to buy Bitcoin at the lowest price possible.
It is not going to be an easy decision to buy Bitcoin when its price is falling. You will need to experience the process yourself so that you have sufficient courage to hit the buy button.
3. When you sell the Bitcoin for a profit (your selling price)
Next is the timing when you sell Bitcoin.
One of my Bitcoin investment strategies is to sell 50% of the Bitcoin when its price is double my purchase price.
By using this strategy:
- I got back my capital.
- I am still hodling the other 50% of my Bitcoin for future profit.
Some Bitcoin investors prefer to keep their Bitcoin. But later they regretted not taking a profit when Bitcoin reached its all-time high.
So, it all falls back to your Bitcoin investment objectives and your strategy.
4. Your expectation of the profit
Just like any other investment, you should set your Bitcoin investment goals. These goals will guide you on your selling price.
Everyone’s investment goals can be different.
That’s why two different Bitcoin investors with the same profit amount can have contradicting views on investing in Bitcoin.
5. How much is your investment?
If you are investing a huge amount in Bitcoin, say RM480,000 for 12 BTC, you will become a millionaire when the Bitcoin price hit RM80,000 BTC. And you will be a multimillionaire when its price reaches RM200,000 BTC.
But, if the Bitcoin price crash to RM20,000 BTC, your Bitcoin investment is only worth RM240,000.
In the same way, if you are investing just RM1,000 for 0.025 BTC at RM40,000 BTC, you will only make a profit of RM1,000 if its price reaches RM80,000 BTC.
If the price crash to RM20,000 BTC, you lose RM500 only.
Generally:
- when you play big, you either win big or lose big
- when you play small, you either win small or lose small
But again, it is of utmost importance to only invest the amount you can afford to lose.
6. Your holding power
As Bitcoin prices fluctuate fast, having a strong holding power is essential if you want the best from your Bitcoin investment.
Some Bitcoin owners regret that they sold off their Bitcoins when the Bitcoin price touched RM10,000 per BTC in the middle of 2017. They could have earned 8 times more if they had a sell-off in November 2017.
If you have enough holding power, you will stay calm and prevent panic selling when the Bitcoin price crash.
That is why your Bitcoin investment capital must be the money you are willing to lose.
7. Uncontrollable factors
Bitcoin as an investment is also affected by the factors we can’t control such as:
- Bitcoin price.
- Bitcoin adoption.
- New regulations on Bitcoin.
- Bad intentions by others such as scams, hackings, and Bitcoin theft.
- World market climate and politics.
- Global crises such as the COVID-19 pandemic.
- Whether Bitcoin can survive for another 10 years.
- The emergence of new and better coins.
I am sure the uncontrollable factors are much longer than the list above.
Since we can’t control these factors, let us focus on factors we can control.
My personal opinion: Is Bitcoin a good investment?
If you ask me, I would say “Yes, Bitcoin is a good investment”. At least, up to the time of writing.
Because I made a gross profit of more than 10% from my Bitcoin.
No, I don’t invest a lot in Bitcoin. I only invest the amount I am comfortable losing. And no, I don’t know how to time the Bitcoin market too. I only invest based on my simple Bitcoin investment strategy.
Perhaps the price alert in my Luno Malaysia account makes Bitcoin price monitoring much easier.
Who has the luxury to monitor Bitcoin price 24/7, right? That Luno reminder will trigger me based on the Bitcoin price I set earlier.
Final thoughts
People can have different views on whether Bitcoin is a good investment.
Early Bitcoin adopters in the early 2000s who still hodl their Bitcoins can make a huge profit from Bitcoin investment.
But, if you ask those who started investing in Bitcoin when Bitcoin was at its peak such as in 2020 and 2021, most probably he’ll tell you to stay away from Bitcoin.
Personally, I believe Bitcoin still hold attractive investment opportunities.
If you want to kick start your Bitcoin journey, grab RM75 in free Bitcoin through my Luno promo code <PAWHVW>. Experience the Bitcoin yourself!
Image Credits
Featured Image by MichaelWuensch from Pixabay
