The ultimate guide to investing in Bitcoin to maximize your returns

Bitcoin (Bitcoin -7.48%) It continues to prove that it is one of the best financial assets you have. Its price is up 145% in 2024 (as of December 18). In the past five years, they have risen by a staggering 1,300%.

As of this writing, The oldest and most valuable cryptocurrency in the world It is trading at around $103,000, with the market cap now above $2 trillion. If you think you missed the boat, think again. It’s not too late.

Here’s the ultimate guide to investing in Bitcoin to maximize your returns.

No market time

Any investor, whether focused on stocks or cryptocurrencies, surely understands the concept Buy low And the sale is high. This strategy of enhancing portfolio returns makes sense.

However, this process is almost impossible to replicate with any level of consistent accuracy. In other words, trying to time the market in an attempt to avoid down days and instead capture only the best days is a waste of time and energy. Excessive trading like this can cause more harm than good to your portfolio. Not only that, but taxes and transaction costs will erode any gains.

Bitcoin has seen several declines of more than 50%. Just imagine if you were able to buy at the lows in March 2020 or in November 2022, for example. The returns since these two points have been incredible.

The top cryptocurrencies have soared this year. The natural thinking among investors who have been sitting on the sidelines is that Bitcoin is set to see a correction in the near future. I can understand this perspective, especially given previous price cycles for digital assets.

As you continue to wait on the sidelines, there is a very real possibility that the price of Bitcoin will continue to rise. Holding cash when this happens results in a huge sum opportunity cost.

Keep it simple

Instead of timing the market, investors should instead prioritize time in the market. This shift in perspective reveals that having a long-term mindset is truly the best approach when it comes to Bitcoin.

But before you invest in cryptocurrencies, it is important to understand what makes them special. The fact that there will only be 21 million coins produced highlights their rarity. In a world where governments are constantly devaluing paper currencies by running printing presses, owning something that has a fixed supply is tempting.

Bitcoin is also decentralized and global. Compared to gold, which is seen as a popular store of value, Bitcoin is more divisible, easier to use in transactions, portable, and verifiable. I don’t think it’s a stretch to think that Bitcoin’s market capitalization will not only reach the value of $17.8 trillion of all the gold on Earth, but it could also exceed that number in the future.

After you prove that you are… Bullish on Bitcoin For the next five to ten years, adopt a Average cost in dollars The strategy is perfect, in my opinion. This eliminates the guesswork needed to time the market correctly. Furthermore, it ensures that investors benefit from multiple price points when using cash to add Bitcoin to their portfolios. This approach turns the volatility of digital assets into an advantage you can exploit.

Once you learn more about Bitcoin, are convinced that it still has a significant upside, and decide that you want to own it in your wallet, the next step is to start making small purchases on a recurring basis. It is also important to keep up with developments happening regarding Bitcoin. Over time, this strategy should lead to a satisfactory result.