Bitcoin has been around since 2009, but it didn’t take off until 2017. In the past few years, Bitcoin has seen a meteoric rise in value. Many investors are looking to get in on the action.
However recently Bitcoin has fallen from a high of 65,000 in November of 2021 down to under 30,000 just in the last month.
If you’re new to Bitcoin, or if you’re wondering how to best profit from cryptocurrency in the coming years, read on! In this article, we will discuss three of the best Bitcoin investment strategies for 2022.
Bitcoin Disclaimer
Like everyone, I am not a predictor of what the markets in anything will do. Let alone, Bitcoin. I’m not telling you to buy or sell Bitcoin.
This is for educational purposes only and should not be taken as financial advice. Do your own research before investing in anything!
With that out of the way, let’s get started!
Bitcoin Price History
Before we get into the strategies, it’s important to know a little bit about Bitcoin’s price history.
Bitcoin was created in 2009 by an anonymous person or group of people under the name Satoshi Nakamoto.
The first transaction took place in 2010 when a man bought two pizzas for ₿10,000 (which would be worth over $600 million today).
In the early days, it was very difficult to find people who were willing to accept Bitcoin as payment. However, as more and more people became aware of Bitcoin, its price began to rise.
Between 2010 and 2016, the price of Bitcoin slowly but surely increased from a few cents to around $700. Then, in 2017, Bitcoin exploded onto the scene, reaching a peak of almost $20,000 by December of that year.
Since then, the price has been more volatile but overall has continued to rise.
Recently Bitcoin has fallen from a high of 65,000 in November of 2021. This is down to under 30,000 just in the last month.
Price volatility with huge gains and then big drops is normal with many high-growth stocks. If we take a look at Amazon. It went from $286 at the beginning of 2015 up to $693 at the end of 2015 for a 242% gain.
It then dropped from $2039 down to $1520 for a 34% drop in just 3 months!
However, right now Amazon is at $2443. So over the long term, Amazon has continued to grow consistently over time.
Are You Bullish or Bearish on Bitcoin and Why?
Before we get into the strategies, it’s important to know where you stand on Bitcoin.
Are you bullish, meaning that you think the price will continue to rise?
Or are you bearish, meaning that you think the price will fall?
There are arguments to be made for both sides.
On the one hand, Bitcoin has a limited supply of 21 million. As demand for Bitcoin increases, the price will continue to go up.
On the other hand, Bitcoin is a very volatile asset. Its price could fall just as easily as it could rise in the short term.
No one knows for sure what will happen to the price of Bitcoin in the future. It’s important to do your own research and make your own decisions.
However, if we look at the chart of Bitcoin, we see it at around $20,000 in December of 2017. Then it went all the way up to 3 times that amount and $60,000 in April 2021. It went back down to half that at $31,000 just 3 months later. Then back up to $65,000 November 2021. Then back down to less than half that at under ~$30,000 today in June of 2022.
So we can see how volatile and how much it moves. But over the long term, we seem to always reach higher highs and it keeps going up.
Besides looking at the price charts, you should ask yourself “Will Bitcoin and the blockchain technology will continue to grow?” For me this is a definite YES. There are many articles and a lot of information on this subject so you should research for yourself.
Now that we’ve covered the basics of Bitcoin’s price history, and researched and determined that we are Bullish, let’s get into the strategies!
If you aren’t Bullish then you can stop here as you will not want to follow these strategies.
Dollar-Cost-Averaging Bitcoin (DCA)
The first strategy we will discuss is called dollar-cost-averaging Bitcoin, or DCA for short.
The basic idea behind this strategy is to buy a fixed amount of Bitcoin every week or month, regardless of the price. Over time, this will average out to a lower cost per Bitcoin than if you had bought it all at once.
This strategy is often used by people who are new to Bitcoin. Many want to minimize their risk and lower their cost-basis.
The easiest way to use this strategy is to set up a recurring buy order on an exchange or with a broker that allows you to do this. Once you have done that, your Bitcoin will automatically be bought at the set interval, and you can sit back and watch your investment grow!
Portfolio Rebalancing with Bitcoin
The second strategy we will discuss is called portfolio rebalancing.
This strategy is a little bit more complex than dollar-cost-averaging, but it can help to increase profits and done right along with dollar-cost-averaging.
The basic idea behind this strategy is to constantly rebalance your portfolio of assets so that you purchase more shares of assets when the price is low and less of assets that have increased in price and value.
For example, let’s say you have a pie that is 85% stock and 15% Bitcoin. Over time the Bitcoin might go up in value. In that case, then new money will be invested into stocks to bring your portfolio back to the 85/15 split that you originally wanted.
Some Brokerage Platforms like M1 Finance offer an automatic rebalancing feature which is a great way to keep your portfolio diversified and on track.
There is also a tax advantage in adjusting new investment as opposed to selling stock to buy more bonds in that case as well.
M1 allows you to set this up automatically with your checking account so that you are then buying more of one asset in your pie when cheap and less when it is expensive.
Holding Bitcoin Long-Term
The last strategy we will discuss is simply holding Bitcoin long-term.
This strategy is the most straight forward, and can be profitable if you are patient.
The idea behind this strategy is to buy Bitcoin and hold it, regardless of the price fluctuations.
If you believe in Bitcoin and think that it will be a successful asset in the long run, then this is the strategy to follow.
To implement this strategy, you simply need to buy Bitcoin and hold it in a wallet that you control. You can hold it on an exchange, but we recommend using a hardware or software wallet so that you have full control over your Bitcoin.
If you do choose to hold your Bitcoin on an exchange, make sure to use a platform that you trust and has a good reputation and has been around for a long time.
Conclusion
That concludes our discussion of the three best Bitcoin strategies for 2022. We hope that you found this helpful and informative. You are now ready to start profiting from Bitcoin! Thanks for reading!
Please feel free to leave any questions or comments below. We would love to hear from you!