Should I buy bitcoin is a question we are starting to hear a bit more. In conversations in the bar and at work, there seems to be more interest from the average consumer.
Part of the interest is the awareness that bitcoin has fallen from its highs but hasn’t imploded as many had predicted.
Bitcoin is looking to stabilize at current levels, although there could still be more downside to come in squeezing out the last of the super hot short-term money from 2017.
So bitcoin could yet fall below $5,000, but even if it does the background mood music is set to become more enchanting yet to lure in tempted buyers.
Should I buy Bitcoin? Five good answers (there could be more)
1. Institutional buyers
The big boys and girls are coming to play.
We already know about Goldman Sachs crypto trading desk plans but now they are tipping their toes into custody. The issue of safe storage of crypto is high up the worry list of the Securities and Exchange Commission when weighing approval of an exchange traded fund (ETF). ICE, the owner of the NYSE, is setting up Bakkt and has the likes or Starbucks onboard for its all-encompassing crypto platform, both institutional-facing (custody services) investor-facing (exchange) and consumer-facing (payments).
2. Mainstream/crypto tie-ups
The number of deals that are cross-fertilising the mainstream and crypto is growing too, through partnerships and acquisitions. A good example is the recent decision by Huobi to buy a controlling stake in Pantronics Holdings, a Hong Kong-based investment firm and earlier in the year Circle buying crypto exchange Poloniex.
And today we hear that Japanese e-commerce giant Rakuten is buying a small exchange called Everybody’s Bitcoin, in yet another example of how mainstream firms are starting to position themselves to compete in crypto.
3. Regulation is actually a good sign
With the European Union gearing up to layout its regulatory stall for crypto in a meeting of finance ministers on 7 September, far from a “clampdown” being feared it should be welcomed.
Much better regulation of the industry is needed both to keep those already inside the ecosystem safe and to attract new blood. Therefore, the EU moves are likely to concentrate on consumer and investor protection and surveillance of exchanges, in addition to the usual angst around money laundering.
So, tougher regulations (or just any regulations at all) should be welcomed and the progress of their implementation a sign of a maturing industry. That’s another reason to buy. The coins the regulators really have a problem are the so called privacy coins such as Monero, ZCash and Dash.
4. Emerging markets crypto appetite
Then there’s the issue of adoption. Bitcoin is not being used as “digital cash” in everyday transactions very much but that’s not the end of the story.
First, there’s technology that can change that by making bitcoin transactions enterprise scalable with side-chain Lightning technology.
Also, don’t let New York, London and Berlin fool you. There are places where bitcoin is gaining traction, at least as a store of wealth but so too as a means of payment.
The countries where you will find the latest crypto adoptees who have already answered to “should I buy bitcoin” with a resounding “yes, what have I got to lose”, go by the name of Venezuela, Argentina, Turkey and Iran – all countries with fiat money that is either valueless or becoming valueless. That’s another support for the bitcoin price and a pointer to how adoption could begin to spread not at a crawl but in leaps.
5. Gold 2.0
And, finally, when we speak of adoption and rue the dominance of speculation, we should not forget that store of value – Gold 2.0 – is the bitcoin network’s other use case. There’s no faster way to get money out of Venezuela than using bitcoin. Bitcoin would have to be priced at $330,000 each for all the bitcoins to be worth the same as the value of gold above ground ($7.5 trillion).
6. Rising interest rates, central bank crypto, Facebook
With interest rates on the rise and emerging markets starting to feel the pinch as the borrowing in dollars that fuelled their growth unwinds, interest in crypto will only grow.
Governments looking to get around US sanctions is also a positive for crypto, even if the Venezuelan Petro seems more scam than crypto. Russia and Iran both have advanced development efforts on their national cryptos.
Sure, that has nothing to do with bitcoin directly, but governments or corporations such as Facebook taking up crypto tech, will have a halo effect on bitcoin, the great granddaddy of them all.
So, should I buy bitcoin? Yes but be careful…
So should I buy bitcoin? If you are now convinced and keep hearing in your head “Yes, I should buy bitcoin”, then you should do so with dollar cost-averaging by drip feeding into the market.
This will smooth returns and losses. Perhaps buy a bit more if you think we are near the bottom. But, as always don’t take our advice. Do your own research. Just some thoughts…
Don’t invest what you can’t afford to lose, but you know that right?
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK’s second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane