Bitcoin’s rising influence as a payment and investment tool is a global phenomenon. However, its inflated prices and not so climate-friendly mining operations are making crypto entrants rethink the future growth. Then there is the unpredictable volatility.
Some of the questions on bitcoin that need to be addressed are: Will bitcoin surpass its all-time high of ~US$ 65,000 apiece? Is there still a scope to invest in bitcoin, and why?
Investment in bitcoin shouldn’t just be based on its lucrative price trajectory. One should also consider its future utility and mainstream acceptance.
Bitcoin’s surging trading volumes comes attached with price volatility. Institutional investors are still unsure about its future price and usage.
The market cap of the world’s largest cryptocurrency soared as much as US$ 1.1 trillion in mid-April on the back of Tesla’s (TSLA:US, NASDAQ:TSLA) acceptance as a payment mode and JPMorgan’s investment in it to hedge high inflation.
However, this bullish crypto market subsided within a month due to environmental concerns around crypto mining.
A miniscule proportion of world’s population has access to digital currencies. The crypto market is still nascent and can tap more potential investors.
Future acceptance of cryptocurrencies in any form may spike bitcoin prices by multiple folds. However, regulations around crypto trading and digital asset inventories is likely to play a bigger part in this upcoming ecosystem.
All we know, bitcoin may hit US$ 100,000 per token by 2022, and that should not surprise institutional investors.
Should you enter bitcoin’s roller-coaster?
Bitcoin’s prices are hovering around US$ 40,000 apiece since the May 19 crash. Several crypto asset investors and analysts claim its long-term price may hit US$ 150,000 per token by 2025.
However, alternative coins have also been giving a tough competition to the blockchain technology-based currency pioneer. For example, Ethereum has gained 236 per cent in 2021, surpassing Bitcoin’s year-to-date (YTD) growth of 36 per cent.
To compete with other blockchain networks, bitcoin developers have reached a consensus to build an upgraded version of its blockchain, which is known as Taproot. This development will make its transactions more secure and complex to crack. This project is likely to conclude by the end of this year.
Bitcoin miners across North America have started adopting renewable energy sources. In the wake of this development, Elon Musk has also been evaluating miners’ “proof of process”. The crypto whale claimed that payment via bitcoin for Tesla electric cars will recommence once its mining operations are sourced on 50 per cent green energy. Tesla still holds bitcoin in its balance sheet, he further tweeted on Sunday.
The crypto market has been evolving in the last one decade. Hence, it could be the right time to enter this digital asset space.
However, one must take into account its high volatile nature, where investments can tumble by 30 per cent to 40 per cent within a day.
In addition to this, global financial regulators have classified bitcoin as a risky asset. Central banks worldwide have also been exploring on to develop their digital currencies using blockchain technology, a sign of increasing acceptance of cryptocurrencies in the global financial system.
Please note: The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.
