• November 28, 2023

Here’s How to Buy Crypto and Evaluate Growth Potential

H.as Bitcoin (BTC) peaked by jumping five times in the past 12 months? Disruptive technology enthusiasts like Cathie Wood, Elon Musk and Jack Dorsey believe we are still in the early stages of the Bitcoin rally.

One thing is certain: the blockchain revolution has taken the financial industry by storm and created a new way in which we can transfer value in the future.

In addition, more and more companies have invested in Bitcoin to hedge against currency devaluations. Elon Musk added instant credibility to the cryptocurrency by investing Tesla’s $ 1.5 billion cash in Bitcoin. So far the investment is spot on with a profit of $ 1 billion. Also, Michael Saylor’s $ 6 billion software company MicroStrategy bought more than $ 2 billion in Bitcoin last summer.

The President of the Federal Reserve Bank of Dallas gives even more credibility that Bitcoin is “a store of value”.

As a result, Star fund manager Cathie Wood said that if all S&P 500 companies donate just 1% of their cash to Bitcoin, the price of Bitcoin will rise by $ 40,000. In addition, due to the increasing adoption rate, Wood has set a price target of $ 400,000 for Bitcoin.

“We expected that institutions would begin to switch to Bitcoin and other crypto assets, but especially to Bitcoin,” said Wood.

How to rate bitcoin

Similar to stocks, market timing is key to making big returns from investing in fungible digital asset classes.

More critically, investors need to consider new tools and valuation methods for the cryptocurrency as traditional methods do not paint an accurate picture of the value of a cryptocurrency.

Bitcoin’s value depends more on supply and demand, as well as the acceptance rate. While not closely correlated, the global financial environment also plays a role in the valuation of Bitcoin and other major cryptocurrencies.

The “three-tier pyramid” method of valuing cryptocurrency

Ark Invest analyst Yassine Elmandjra said that “on-chain data” is one of the best ways to analyze Bitcoin. The analyst used a three-tier pyramid to explain the evaluation process:

  1. Active dealers: Traders looking to take advantage of the short-term price movement should use metrics such as the Relative Strength Index to predict crypto movement. Investors can also base their decisions on market acceptance reports. For example, the price of Bitcoin soared when Tesla announced its investment earlier this year.
  2. Long term investment: If you want to keep the crypto investment long term, you need to consider the basic factors – not the short term specs. The basics include the use of crypto coins in the financial markets and in our daily lives.
  3. Acceptance as a valid payment method: The health of the network is the biggest factor in asset acceptance by stakeholders and observers. Safety, transparency, and financial integrity are also important to his or her health.

How to Buy Crypto:

Bitcoin looked complex and intimidating to new investors five years ago, but the increasing popularity of digital coins has made buying Bitcoin as easy as buying shoes online.

Investors can buy, hold and sell crypto coins on traditional exchanges (like the Coinbase listed on the Nasdaq) or on popular fintech platforms (like Square, Robinhood or Cash).

Here are a few more ways to invest in crypto markets:

  • Stocks: Investors can own stocks that offer crypto services, such as B. Coinbase, Square or PayPal.
  • ETFs: Exchange Traded Funds are a different way. Some popular crypto ETFs are the Amplify Transformational Data Sharing ETF, the Siren Nasdaq NexGen Economy ETF, the First Trust Indxx Innovative Transaction & Process ETF, and the Capital Link NextGen Protocol ETF
  • Options: Brokers in some countries allow investors to trade options against cryptocurrencies.
  • Crypto IRAs: Cryptocurrency IRAs have become increasingly popular lately. ITrustCapital, the world’s largest crypto IRA retirement account platform, had total assets topped $ 1 billion in late March.
  • Futures: Similar to stock and commodity futures contracts, traders can also speculate on Bitcoin futures contracts.

The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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