The Top 5 Considerations for Purchasing Bitcoin
The crypto markets have shown a bear trend for several months. However, people are still interested in Bitcoin, which is the leading cryptocurrency. New investors leap this crypto asset every day. And as the crypto market stabilizes, more people will invest in this digital asset. But to benefit from your Bitcoin investment, you need a strict strategy. Also, focus on the critical drivers of Bitcoin’s value.
Many people compare Bitcoin to bonds and stocks. However, this cryptocurrency is different from bonds and stocks. Seasoned investors use standard metrics like debt to beta or equity and price to their earnings ratios to evaluate stocks. But when choosing your crypto investment, you consider different metrics. And these are the key factors to consider when purchasing Bitcoin.
1. Business Proposition
Bitcoin projects compare to other startups or businesses. The purpose of any business is to fulfill needs or solve significant problems. And this should also be the case for a crypto startup. If you opt to invest in Bitcoin for the long-term, evaluate the team behind the investment project. What’s the mission of the group, their enthusiasm, and their mission? Avoid questionable projects while focusing on prospects that bring real value.
Also, consider how the team sells Bitcoin and the security measures it has in place. For instance, will you buy and own Bitcoin or own a part of the company? Such considerations will enable you to venture into a good crypto business to help you accomplish your goals.
2.Circulating and Total Supply
Total Bitcoin supply is the maximum coins amount that miners can produce and release into the market. Satoshi Nakamoto set the Bitcoin amount that miners can generate at 21 million bitcoins, and the founders hold most of the mined bitcoins. However, you can purchase Bitcoin via crypto exchanges like the bitcoin trend app. But the limited total Bitcoin supply drives its increasing value. That’s because low supply increases demand.
3. Price History
Bitcoin is a volatile asset because of the hype, speculation, absence of regulatory oversight, as well as pump and dump schemes. So, before investing in this virtual currency, consider its price history. That way, you can determine the right time to purchase and sell this digital asset for profits.
4. Community Activity
A Bitcoin investment project is more valuable when it involves a larger community. And checking the project’s followers on social media can help you determine its community size. Therefore, research a Bitcoin investment project online before joining it. Choose a project to invest in if it has more and highly active followers.
5. Developer Activity
A vital investment project depicts high developer activity. A down trending or low activity should concern you. Therefore, check the developer activity before investing in a Bitcoin project. Also, check whether people have reported issues with the project. For instance, if you opt to purchase Bitcoin via a crypto exchange, determine whether people have launched complaints about the platform. Also, check the number of people using the platform to trade Bitcoin.
Final Thoughts
Bitcoin is different from bonds and stocks that people compare it with when investing. The difference in standard metrics makes Bitcoin different from bonds and stocks. Therefore, understand the metrics before trading this virtual currency. It’s also crucial to understand what Bitcoin is and its working mechanisms before you invest in it. Unfortunately, some people invest in Bitcoin with little or no knowledge of Bitcoin and its technology. They speculate on the hype and price action. And this is a dangerous way to invest in Bitcoin. Therefore, take the time to invest in this virtual currency before investing.
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