by As the price of Bitcoin continues to soar, one has to wonder: Is it too late to buy bitcoin? This post answers that question by examining several factors including price history, valuation, expert predictions, risks, and more.
Contents
Price History
Today in April 2021, the price of one Bitcoin hovers around $60,000. Shockingly enough, one Bitcoin was valued at just $0.07 in 2011! That’s a 10 year return of 85,700,000%!
As much as I want to throw a tantrum and throw up my hands and scream NO FAIR…. we need to be realistic. The unfortunate truth is that none of us can travel back in time. If it were possible, we’d all easily be billionaires.
Just look at this price chart of Amazon over the years.
In 2009, Amazon hit a high of about $130. Many would have called that expensive and “too late to buy”?
In 2011, it hit a high of nearly $250. Too late to buy?
In 2016, it high a high of about $840. Too late to buy?
Today it stands at nearly $3,400 a share. Too late to buy?
The point I’m trying to make is that if you look solely on price history or a market top, it will always seem like it’s too late to buy. Sure, buying Amazon at $840 seemed “late” and overpriced compared to when you could have bought it for $130, but it is still a good buy considering it’s at $3,400! It’s impossible to predict the future.
So, is it too late to buy Bitcoin? It’s impossible to determine by looking at a price chart alone. But the long term upward trend is a promising sign of future price growth.
Let’s now examine Bitcoin’s market capitalization.
Market Capitalization
If Bitcoin was a fiat currency, it would be the 14th highest valued currency by market cap. That means that all of the Bitcoin in the world would have a higher value than all of the Russian Rubles in the world (ranked 15th) or all of the Thai Baht in the world (ranked 16th).
To figure out whether or not it’s too late to buy bitcoin we need to ask ourselves, what it the potential of Bitcoin? Where could it possibly be headed?
Let’s say Bitcoin actually becomes the “world’s currency” like some have predicted. For Bitcoin to have the same market cap as the U.S. dollar, it would need to jump nearly 1600%.
If this were to occur, the price of one bitcoin would have to go from $60,000 to over $1 million per coin.
To put that in perspective, a $1000 investment in Bitcoin today would be worth nearly $17,000, if that were ever to occur. Of course it is a long shot, but could it happen?
Expert Predictions
What do some “famous people” or “experts” predict will happen to the price of Bitcoin?
Of course nobody can accurately predict the future. Bitcoin could go to $1 Million or $1. Nobody really knows. But it’s still a good idea to get the opinions of people who are familiar with business or finance.
Some economists think Bitcoin will go to $100, while others think it could go as high as $1 million. There are plenty of predictions of Bitcoin rising above its current price of $60,000. Depending on who you ask, it might not be too late to buy Bitcoin.
Risks
Like making any investment, investing in Bitcoin comes with risk.
- Investing in bonds is low risk, low reward.
- Investing in stocks is medium risk, medium reward.
- Investing in Bitcoin, at this point in time, is high risk, high reward.
There are several risks associated with Bitcoin that you should consider.
Bitcoin:
- Could go to zero.
- Could get confiscated by the government
- Could get banned by governments
- Could incur special taxes
- Could fail and result in double spending
- Could fail as a result of a quantum hack
- Could result in theft or loss
Because of these risks, I don’t think there are any serious financial advisors that would tell you to invest 100% of your portfolio into Bitcoin.
There are also risks associated with NOT buying any Bitcoin.
If fiat currencies fail, or experience hyper-inflation, the price of Bitcoin may become several multiples higher than it is today. If you were to try to buy Bitcoin at that point in time, you’d likely be paying more money for less.
Most would advise allocating between one and ten percent to Bitcoin. And certainly don’t invest more in Bitcoin than you can afford to lose.
Wrapping It Up
So, is it too late to buy Bitcoin?
The quick and easy answer is NO, it is NOT too late to buy Bitcoin.
It is hard to determine based on its price history; however, the price of Bitcoin is experiencing a long-term upward trend which means that there is a good chance that Bitcoin still has room to grow.
Based on examining Bitcoin’s market cap, Bitcoin could continue its upward trajectory if it becomes widely adopted, or assumes the position of “the world’s currency”.
Based on examining the risks associated with owning and NOT owning Bitcoin, it would be prudent to allocate a small portion of your portfolio to Bitcoin at its current price, given the amount of uncertainty.
Let me know your thoughts below!
Do you think it’s too late to buy Bitcoin? Why or why not?
