The crypto market is experiencing a deep correction in 2022, raising the question: is now a good time to buy Bitcoin? Keep reading to find out.
Bitcoin is Dipping, Not Dying
At the time of writing this article, 1 Bitcoin was worth about $20,279. This is probably not where most Bitcoiner investors expected BTC to be in mid-2022 after the historic all-time high of $68,789 in November 2021 (~70% drop).
Nevertheless, seasoned Bitcoin holders remain unruffled because this isn’t their first rodeo. Bitcoin has crashed many times in the past, only to bounce back stronger.
Let’s take a look at some of Bitcoin’s most prolific price drops and comebacks.
Bitcoin Dips and Comebacks
- In June 2011, Bitcoin recorded a peak price of $29.58. By November that same year, it dipped to $2.14. The price recovered slightly in 2012, and it wasn’t until February 5, 2013, that Bitcoin surpassed the all-time high of June 2011, reaching $32.72. On November 30, 2013, Bitcoin climbed to the $1,000 mark for the first time, registering a price of $1,156.14 at its local peak. Several days after, the price slumped below $1,000, remaining there for three years.
- On January 1, 2017, Bitcoin ascended back above the $1,000 mark and then surpassed $2,000 in mid-May. The price kept on climbing that year, driven by the ICO mania. Consequently, early investor excitement increased at the promise of huge gains, which ballooned significantly on December 17, 2017, when Bitcoin hit probably the most remembered all-time high in its history at just above $20,000.
- After the historic 2017 peak, more eyes were now on Bitcoin. Hence the cryptocurrency was highly criticized when the price maintained a losing streak in 2018, dropping below $10,000 from March to the end of the year. 2018 was a harsh crypto winter, with Bitcoin closing the year at around $3,700. The following year, BTC closed the year at around $7,190, while it came very close to $30,000 in 2020.
- Despite the long wait, Bitcoin made a huge comeback in 2021, growing more than three times compared to its 2017 peak to over $65,000, fuelled by corporate treasury and institutional buying.
Taking lessons from its history, Bitcoin has demonstrated time and again that the sky is the limit. Therefore, the price might bounce back again, hitting $100,000 in 2024 if the stock-to-flow prediction model is anything to go by.
Why Could Now Be a Good Time to Buy Bitcoin?
Being a Bitcoin investor is like being on a rollercoaster ride. There have been so many highs and lows that if you’re only investing for speculation’s sake, you’ll probably run out of stamina pretty quickly and cash out. But, instead of panic selling for a loss during a crash, speculative investors should dig deeper to find other motivational factors to keep buying BTC even when the price is falling.
Below are several reasons why now may be a good time to buy Bitcoin.
The Price Drop Has Created an Exciting Buying Opportunity
Seasoned investors don’t panic sell during a dip. Instead, they buy more Bitcoin, taking advantage of the lower price.
So, how do they know and rest assured that the price will rise again?
Well, that’s because they see Bitcoin for what it is: a cryptocurrency that’s here to stay.
Bitcoin enables people to control their own money and makes digital payments cheaper by removing intermediaries and the extra costs involved. Moreover, it can act as a hedge against a struggling economy and shaky banking system but it’s censorship-resistant money that only the holder controls and can use in any way they like.
The Bitcoin Trading Ecosystem Has Matured
The Bitcoin trading ecosystem has come a long way since the early years of crypto.
Market making has improved considerably and new solutions like custody and lending services have emerged. Retail crypto exchanges have also become more accessible across the globe, allowing users to exchange local currencies for crypto.
Additionally, institutional crypto exchanges like LMAX Digital and Bakkt now exist. These trading platforms serve institutional and professional clients while offering institutional-grade trading solutions. The current trading ecosystem is, therefore, well equipped to serve professional traders that want to trade on spot and derivatives markets.
Investors interested in executing high-value crypto trades can do so through OTC desks accessible on most exchanges. Alternatively, they can use full-service crypto brokerages to help them with their investments. These brokerages undertake execution, clearing, settling, and custody on behalf of their clients.
Furthermore, crypto banks are significant players in the ecosystem. They service digital asset exchanges, supplying fiat on/off ramps from exchanges to investors. Silvergate and Signature Bank are examples of crypto-friendly banks.
Liquidity providers, also known as market makers, have also become plentiful to service the growing Bitcoin market. Companies such as Galaxy Digital, Jump Liquidity, and HedgeTech provide liquidity in leading cryptocurrency trading pairs, making it easier for professional investors to trade large volumes.
Crypto Custodians & Lenders Are Paving the Way for More Institutional Adoption
Crypto custody solutions are available via financial services companies, such as Fidelity International, Kingdom Trust, Coinbase, and many more. This enables institutional investors to securely store their digital assets with a qualified custodian, opening the doors to more pockets of the institutional investor community to enter the crypto markets.
Moreover, crypto investors are embracing crypto lending solutions available on platforms such as BlockFi and Genesis. Lending solutions provide liquidity to traders, helping them buy more BTC.
The ever more robust Bitcoin trading ecosystem makes trading and storing BTC increasingly simpler and more convenient.
Institutional-Grade Liquidity Enables All Types of Investors to Get Involved
Institutional-grade liquidity from some of the market makers mentioned above has allowed all types of investors to get involved. According to data on Coingecko, 27 public companies are currently holding Bitcoin.
At the time of writing this article, MicroStrategy’s BTC holdings stood at 129,218. That makes MicroStrategy the public company with the largest BTC holdings. Purchasing large amounts of Bitcoin would not be possible without professional market makers and over-the-counter brokers.
Regulations Have Never Been Clearer
Crypto regulations are now clearer than they were ten years ago. For instance, cryptocurrency exchanges in the US are legal and are guided by the Bank Secrecy Act.
Moreover, crypto exchanges in Europe are subject to the EU’s anti-money laundering legislation. Such laws instill confidence in investors that only want to deal with regulated exchanges.
Different countries such as the UK, Switzerland, and Singapore have implemented various regulations, with El Salvador making history as the first country to make Bitcoin legal tender. The Central African Republic followed suit in 2022.
Investors Can Choose from a Range of Bitcoin Investment Vehicles
Bitcoin investment vehicles are alternatives to the popular direct method of investing in Bitcoin. Examples of regulated Bitcoin investment vehicles include the Grayscale Bitcoin Trust, futures-based Bitcoin ETFs, and Bitcoin exchange-traded products (ETPs).
Grayscale Bitcoin Trust gives investors indirect exposure to Bitcoin and manages assets worth over $13 billion. You can only invest in this trust as an accredited investor. Grayscale uses the SEC definition to determine who is an accredited investor and who isn’t.
The Iconic Fund Physical Bitcoin ETP is a physically-backed exchange-traded product that provides investors with exposure to the price development of Bitcoin. All coins held in the ETP are stored in cold storage with a regulated custodian, and investors can buy the ETP on Deutsche Börse Xetra, SIX Swiss Exchange, and Euronext Paris and Amsterdam.
About Iconic Funds
Iconic Funds is the bridge to crypto asset investing through trusted investment vehicles. We provide investors both passive and alpha-seeking strategies to crypto, as well as venture capital opportunities.
We deliver excellence through familiar, regulated vehicles offering investors the quality assurances they deserve from a world-class asset manager as we champion our mission of driving crypto asset adoption.
- How Green Mining Will Become the Norm for Bitcoin Network
- How accurate is the Bitcoin Stock-to_Flow Model?
- Bitcoin Education Will Pave the Way for Hyperbitcoinization
Iconic in Press
- Das Investment: Kryptowährungen kommen 2022 im Mainstream an
- Private Banking Magazin, Bitcoin – das perfekte Beispiel für ein ESG-Investment?
- Institutional Money, Krypto-Manager steigt bei Family Office ein
- Morningstar, Iconic Funds Expands Product Range With a Physical Ethereum ETP
Recent Research Reports
How did portfolios perform during the pandemic? ➡ Download here
Analyzing the Primary Value Drivers of Leading Cryptocurrencies ➡ Download here
How Effective are Common Investment Strategies with Bitcoin? ➡ Download here
Investigating the Myth of Zero Correlation Between Crypto Currencies and Market Indices ➡ Download here
For further information, please visit deutschedastg
“This article represents solely a non-binding preliminary information which serves exclusively advertising purposes. It is not a prospectus in the sense of the Regulation (EU) 2017/1129(Prospectus Regulation) and the German Securities Prospectus Act (Wertpapierprospektgesetz – WpPG). It does not constitute an offer of securities for sale in the United States and the securities referred to in this notice may not be offered or sold in the United States absent registration or an exemption from registration.
The price of an investment in an Iconic ETP may go up or down and the investor may not get back the amount invested. The price performance of cryptocurrencies is highly volatile and unpredictable. Past performance is hence no guarantee of future performance. You agree to do your own research and due diligence before making any investment decision with respect to securities or investment opportunities discussed herein. The approval of the prospectus should not be construed as an endorsement of the securities offered or admitted to trading on a Regulated Market. These are not extensive risk considerations. Prospective investors should read the prospectus before making any investment decision in order to fully understand the potential risks and rewards of deciding to invest in the securities. The prospectus is available at https://deutschedigitalassets.com/xbti-iconic-funds-physical-bitcoin-etp/.