There is little doubting why, in the run up to Bitcoin all time high of $20,000, people were entering the cryptocurrency market. There was a promise of massive growth, potentially huge returns on investment, and a story already told of missing out as an early adopter.
People thus flooded the market, entering for all the wrong reasons, really. However, this created a massive spike in interest and a massive spike in price. Things have changed somewhat now, with Bitcoin heading towards $6,000 rather than above $20,000, and this has caused a huge sell off as investors now flood out of the market. But what reasons remain today for people to buy Bitcoin?
Get in for the right reasons
The issue was, with this massive spike in interest, that people were throwing money at something they did not understand in the hopes of making a profit. It sounds familiar because it happened before.
The dotcom boom has predicated around similar happenings. People jumped on the bandwagon, not knowing why, and built a huge market on a flimsy base. Those who are not so technologically inclined may have shunned understanding Bitcoin as a new wave of technology, and used that as an excuse. But then still, as investors, they should at least be savvy with their assets.
Bitcoin is a bad asset
In comparison to stocks and bonds, Bitcoin does not hold much water as a good investment asset, especially when considering long-term capital appreciation. True, Bitcoin has increased its value substantially over time, but it lacks a few other facets.
In stocks, an investor stakes a claim in the company’s net assets, and as the value of the company rises over time, so does the equity. In bonds, individuals essentially loan the company money in return for an agreed upon stream of interest income.
Thus, both these options provide future profits and future income and tick the boxes of sound investments. Bitcoin cannot be counted in the same breath as stock and bonds. Having one Bitcoin today does not entitle you to more Bitcoins in the future, nor does it offer the promise of any future cash flow.
Look at the technology
But in any case Bitcoin shines as a technology. Those who are trying to separate Bitcoin and Blockchain are wrong in doing so, but their premise is right; Bitcoin should be heralded for its potential as a technology…
Read Full: What Reasons Are Left to Buy Bitcoin Today?