Is It Wise to Invest in Bitcoin Right Now?

Is It Wise to Invest in Bitcoin Right Now? 2022 will likely be one of the most tumultuous years for crypto. With Bitcoin’s shift into the mainstream as a legitimate asset to the crash of Terra and Luna, it’s clear that something has permanently changed in the world of cryptocurrencies.

Coming Back to Down to Earth: Terra and Luna

According to the best crypto news websites, while Terra and Luna were initially lauded as the next evolutionary step forward for crypto, their crash has shown us a few things.

1. Stablecoins may not be all that stable

Stablecoins were first touted as a safe compromise for investors. Traditionally, stable coins like Tether pegged their value to that of fiat currencies such as the US Dollar. All of which gave these assets a measure of stability not seen in the crypto world.

But by doing so, the status of cryptocurrencies as decentralized and unregulated assets becomes somewhat diluted. So rather than being a free-market investment, stable coins represent the worst of both worlds — the volatility of cryptocurrencies linked to real-world events. All while bearing the so-called respectability of a stable asset.

As we’ve seen from the crash of Luna, investors believed that stable coins were the way forward. And unfortunately, this backfired on them when the token’s value suddenly bottomed out.

2. The crypto market is vulnerable to market manipulation

Over the past few years, Bitcoin and other cryptocurrencies experienced a massive explosion in popularity. This was partly due to a combination of factors such as warming attitudes towards decentralized finance and fears of rising inflation.

Additionally, crypto’s growth explosion can also be linked back to specific individuals who have worked to create a cult of personality around themselves. For example, Elon Musk continually juiced the market by sending out a series of Tweets that sent BTC and DOGE prices skyrocketing before a sudden change in Tesla policy caused a widespread crash.

The same can also be said for the man behind TerraUSD and Luna Crash. Kwon Do-Hyung, or Do Kwon, is the founder of the now controversial Terraform Labs. Do Kwon regularly took to social media to trumpet his achievements promising that TerraUSD and Luna would be world-changing. 

As a result, financiers rushed to back Terraform Labs’ risky project. From here, prices would skyrocket from 2018 onwards before suddenly crashing and burning in a steep 2022 selloff. Unlike Tether, Terra is not backed by any hard assets but markets itself as a stable coin. 

Additionally, the departure of Terraform Labs’ in-house legal team has had many speculating whether the company had run into financial problems.

3. Volatility will always be a part of the crypto market

Anyone who says that the crypto market will stabilize with time is likely woefully misinformed. The fluid and unregulated nature of the market means that volatility will always be a part of the market, even if or when cryptocurrencies see widespread adoption.

Given all of these factors, one would understandably be worried about investing in Bitcoins or any other cryptocurrency. So, we ask the question:

Should You Invest in Bitcoins

The answer is definitely yes. 

Although Bitcoin prices have taken a hit, trends show that BTC prices have continually rebounded after every crash. This can probably be attributed to several factors:

1. Bitcoin is the gold standard for cryptos

Throughout everything, Bitcoin still stands strong as the most popular form of cryptocurrency globally. While it’s still subject to the same volatility as its cousins, the mysterious nature of Satoshi Nakamoto and their neutrality has worked to Bitcoin’s advantage. That’s because the manipulative behavior has given Bitcoin a measure of stability in a wild market. 

Also, as it’s the oldest cryptocurrency available, Bitcoin is still held up by many as an example of cryptocurrencies worldwide.

2. More countries are adopting Bitcoin

Despite the massive uncertainty going on, more countries worldwide have begun accepting Bitcoin as legal tender. El Salvador and The Central African Republic are 2 recent examples of countries that have adopted Bitcoin wholesale.

While both nations aren’t exactly the most stable, this bodes well for the future of cryptocurrencies. The decentralized and open-ended nature of Bitcoin allows transactions to be effortlessly performed across nations which is sure to be an essential part of globalization.

Closing Thoughts

Investing in Bitcoin and other cryptocurrencies can be a risky proposition. However, digital assets look like the only trustworthy choice in a crazy world, given the current economic and political climate.

So, as with all investments, you should only invest what you’re prepared to lose and always do your research.

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