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Why invest in cryptocurrency?

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The most profitable assets

Returns of hundreds of percent

The main reason to invest in cryptocurrency is the good returns it can provide. You can take Bitcoin as an example. If you look at Bitcoin’s percentage increase in value over time on a logarithmic chart, the numbers speak for themselves. On average, the price increase by several hundred percent annually.
Chart of the Bitcoin price and halvings

Halvings cause price increases

One of the clearest patterns on the chart is by looking at the
halvings When the dividend to miners paid in newly created cryptocurrency, (e.g. Bitcoin), is halved. With Bitcoin, it has happened 3 times before. In 2012, 2016 and 2020. These supply halvings are usually followed by increasing prices.
which is when the supply rate of new Bitcoins is halved. The first two
halvings When the dividend to miners paid in newly created cryptocurrency, (e.g. Bitcoin), is halved. With Bitcoin, it has happened 3 times before. In 2012, 2016 and 2020. These supply halvings are usually followed by increasing prices.
were followed by huge price increases of several thousand percent before the Bitcoin price got a longer-lasting
correction When a price declines before it continues its upward direction.
.

One of the reasons the price significantly increased is the fact that Bitcoins became scarcer and thereby more valuable as the supply of new Bitcoins dropped permanently.

The latest
halving When the dividend to miners paid in newly created cryptocurrency, (e.g. Bitcoin), is halved. With Bitcoin, it has happened 3 times before. In 2012, 2016 and 2020. These supply halvings are usually followed by increasing prices.
occurred in May 2020. Therefore, many believe that there is a high probability of large price increases in the near future.

You can see the exact time of the Bitcoin
halvings When the dividend to miners paid in newly created cryptocurrency, (e.g. Bitcoin), is halved. With Bitcoin, it has happened 3 times before. In 2012, 2016 and 2020. These supply halvings are usually followed by increasing prices.
here.

Bitcoin's influence in the market

Bitcoin represents over half of the total cryptocurrency
market value Total number of an asset existing multiplied by the value of the asset. (Also called market capitalization).
. At the same time, most other cryptocurrencies are primarily traded in Bitcoins. Because of that, the rest of the cryptocurrency market tends to follow Bitcoin’s price trend to some extent. If Bitcoin’s price increases drastically then you will typically also see a drastic price increase in the rest of the cryptocurrency market. Thereby, on the basis of Bitcoin’s
halving When the dividend to miners paid in newly created cryptocurrency, (e.g. Bitcoin), is halved. With Bitcoin, it has happened 3 times before. In 2012, 2016 and 2020. These supply halvings are usually followed by increasing prices.
, you can also invest in other cryptocurrencies that you see a potential in and experience huge returns. Possibly even greater returns than when investing in Bitcoin.

Increasing adoption and interest

Commercial adoption

Of course, the increasing prices of cryptocurrency are also a result of a generally rising adoption and interest in cryptocurrency.

E.g. the coffee giant Starbucks has planned to start accepting cryptocurrency by 2020 as a means of payment and Europe’s biggest food delivery service Takeaway.com has already introduced Bitcoin as a means of payment. In addition, by 2020 it has become possible to buy Bitcoins in tens of thousands of stores in the US, e.g. in 7-Eleven, CVS, and Rite-Aid. The payment provider PayPal will probably also start offering cryptocurrency in the near future.

Latin America is also experiencing an increasing implementation of cryptocurrency. Especially due to high inflation in several countries. As an example, you can buy public transport tickets with Bitcoins in Argentina and more than 20,000 retailers in Venezuela accept cryptocurrency as a means of payment.

Ethereum, which is the world’s second largest cryptocurrency network, has also seen great progress in adoption and interest. One of the reasons is that major companies such as Microsoft, Visa, Intel, Reddit, JPMorgan Chase, Ernst & Young and many more have started developing ways to use Ethereum in their companies and products.

Governmental adoption

There are several states that have begun implementing cryptocurrency as a means of payment. E.g. it has been temporarily possible to pay taxes in the US state of Ohio with cryptocurrency while other US states are considering allowing the use of cryptocurrency to pay taxes. At the same time, a national cryptocurrency in China has been underway for years and several other countries are considering something similar.
NB
All these examples of crypto adoption are very few out of a whole lot.
Bitcoin Accepted Here

Major financial players

Major financial players invest in cryptocurrency

Another
bullish Refers to an optimistic/positive outlook of a market where the prices are expected to increase.
indication for cryptocurrency is that a lot of big investors, including
institutional investors An entity which pools money to invest in assets or originate loans. E.g. banks, insurance companies, pensions, hedge funds, etc.
, have started investing in cryptocurrency. Especially in Bitcoin. In 2019 and 2020, this institutional involvement has accelerated quickly. An example of this is the asset manager Grayscale Investments which primarily manages cryptocurrency investments for
institutional investors An entity which pools money to invest in assets or originate loans. E.g. banks, insurance companies, pensions, hedge funds, etc.
. From Grayscale’s quarterly reports, you can see that the amount of new money invested in cryptocurrency through Grayscale has roughly doubled almost every single quarter in 2019 and 2020.

In addition, a growing number of acknowledged major investors are publicly speaking about their cryptocurrency investments. Some of the most prominent investors in this case are the billionaires Paul Tudor Jones and Chamath Palihapitiya.

The reason that all these investors buy Bitcoins is obviously because they expect high returns/price increases.

Further advancement

This positive institutional advancement seems to be continuing. E.g. several well-known asset managers are moving into the cryptocurrency market. One of them is the huge Fidelity Investments which has $2.5 trillion assets under management.

The opportunity to invest in Bitcoin is also on the way to more traditional exchanges. E.g. the large German stock exchange Xetra.

These examples, along with many others, increase the potential for institutional exposure to the cryptocurrency market.

Major financial players provide more stable growth

The fact that more
institutional investors An entity which pools money to invest in assets or originate loans. E.g. banks, insurance companies, pensions, hedge funds, etc.
are getting into cryptocurrency will contribute to increasing prices and likely contribute to more stable price growth since
institutional investors An entity which pools money to invest in assets or originate loans. E.g. banks, insurance companies, pensions, hedge funds, etc.
typically invest more long term than
retail investors An individual who purchases assets for his or her own personal account rather than for an organization. Retail investors typically trade in much smaller amounts than institutional investors.
do. In other words, they do not completely sell out due to big or small price declines as often as
retail investors An individual who purchases assets for his or her own personal account rather than for an organization. Retail investors typically trade in much smaller amounts than institutional investors.
tend to.

The future of cryptocurrency

How much will cryptocurrency increase in value?

How much cryptocurrencies will increase in value over time is impossible to determine but according to the past, cryptocurrencies has been the world’s best performing assets during the time cryptocurrency has existed. Thereby, you can possibly expect something similar to apply in the long-term. In the short term, however, it is very difficult to determine as the markets are very volatile since they are still relatively small.

A good visualization of the size of the cryptocurrency market can be found here. However, the fact that the market is still small also means that it has a much greater growth potential than other markets that are already large.

What do the experts say?

Most crypto-experts seem to agree that the prices will rise in the longer term but disagree on how much. However, most estimates for Bitcoin’s price by the end of 2021 are at least $50,000. One of the most well-known and historically accurate models for predicting Bitcoin’s price is called the
Stock-to-Flow A price model defined as a relationship between production and current stock.
model. According to this model, Bitcoin’s price will average around $100,000 after Bitcoin’s
halving When the dividend to miners in newly created cryptocurrency, (e.g. Bitcoin), is halved. With Bitcoin, it has happened 2 times before. In 2012 and 2016. The next one for Bitcoin is in 2020. These supply halvings are usually followed by increasing prices.
in 2020 until Bitcoin’s next
halving When the dividend to miners in newly created cryptocurrency, (e.g. Bitcoin), is halved. With Bitcoin, it has happened 2 times before. In 2012 and 2016. The next one for Bitcoin is in 2020. These supply halvings are usually followed by increasing prices.
in 2024, after which the average price will rise again. You can see a visualization of the
Stock-to-Flow A price model defined as a relationship between production and current stock.
model here where it is compared to Bitcoin’s actual price.

In addition, many experts expect that cryptocurrencies linked to the new DeFi (Decentralized Finance) will experience exceptional price increases in the near future.

We are in the beginning of blockchain technology

It is also important to point out that the
blockchain technology A technology that serves as a growing list of records, called blocks, that are linked using cryptography. This list of records, (transaction ledger), is by design resistant to modification of the data it contains. Was invented in 2008 by Satoshi Nakamoto (Founder of Bitcoin).
, cryptocurrency is based on, has only been around for a decade, and therefore, it has not achieved wide adoption in the world yet.

The
blockchain technology A technology that serves as a growing list of records, called blocks, that are linked using cryptography. This list of records, (transaction ledger), is by design resistant to modification of the data it contains. Was invented in 2008 by Satoshi Nakamoto (Founder of Bitcoin).
is obviously superior in many ways compared to existing technologies. (Not just for creating mediums of exchange like Bitcoin). Therefore, it is likely to have a greater significance in the future than it has today.
3 in a circle

How to utilize cryptocurrency?

Guidance and suggestions of where and how to buy, earn, transfer, and store cryptocurrency
Copyright © 2020 Into The Coins
Email: support@intothecoins.com

The information contained herein is for informational purposes only.
Nothing herein shall be construed to be financial advice.
Take this information and do your own research.
Follow us on Facebook

Why invest in
cryptocurrency?

The most profitable assets

Returns of hundreds of percent

The main reason to invest in cryptocurrency is the good returns it can provide. You can take Bitcoin as an example. If you look at Bitcoin’s percentage increase in value over time on a logarithmic chart, the numbers speak for themselves. On average, the price increase by several hundred percent annually.
Chart of the Bitcoin price and halvings

Halvings cause price increases

One of the clearest patterns on the chart is by looking at the halvings[1] which is when the supply rate of new Bitcoins is halved. The first two halvings[1] were followed by huge price increases of several thousand percent before the Bitcoin price got a longer-lasting correction[2].

One of the reasons the price significantly increased is the fact that Bitcoins became scarcer and thereby more valuable as the supply of new Bitcoins dropped permanently.

The latest halving[1] occurred in May 2020. Therefore, many believe that there is a high probability of large price increases in the near future.

You can see the exact time of the Bitcoin halvings[1] here.

Bitcoin's influence in the market

Bitcoin represents over half of the total cryptocurrency market value[3]. At the same time, most other cryptocurrencies are primarily traded in Bitcoins. Because of that, the rest of the cryptocurrency market tends to follow Bitcoin’s price trend to some extent. If Bitcoin’s price increases drastically then you will typically also see a drastic price increase in the rest of the cryptocurrency market. Thereby, on the basis of Bitcoin’s halving[1], you can also invest in other cryptocurrencies that you see a potential in and experience huge returns. Possibly even greater returns than when investing in Bitcoin.

Increasing adoption and interest

Commercial adoption

Of course, the increasing prices of cryptocurrency are also a result of a generally rising adoption and interest in cryptocurrency.

E.g. the coffee giant Starbucks has planned to start accepting cryptocurrency by 2020 as a means of payment and Europe’s biggest food delivery service Takeaway.com has already introduced Bitcoin as a means of payment. In addition, by 2020 it has become possible to buy Bitcoins in tens of thousands of stores in the US, e.g. in 7-Eleven, CVS, and Rite-Aid. The payment provider PayPal will probably also start offering cryptocurrency in the near future.

Latin America is also experiencing an increasing implementation of cryptocurrency. Especially due to high inflation in several countries. As an example, you can buy public transport tickets with Bitcoins in Argentina and more than 20,000 retailers in Venezuela accept cryptocurrency as a means of payment.

Ethereum, which is the world’s second largest cryptocurrency network, has also seen great progress in adoption and interest. One of the reasons is that major companies such as Microsoft, Visa, Intel, Reddit, JPMorgan Chase, Ernst & Young and many more have started developing ways to use Ethereum in their companies and products.
Bitcoin Accepted Here

Governmental adoption

There are several states that have begun implementing cryptocurrency as a means of payment. E.g. it has been temporarily possible to pay taxes in the US state of Ohio with cryptocurrency while other US states are considering allowing the use of cryptocurrency to pay taxes. At the same time, a national cryptocurrency in China has been underway for years and several other countries are considering something similar.
NB
All these examples of crypto adoption are very few out of a whole lot.

Major financial players

Major financial players invest in cryptocurrency

Another bullish[4] indication for cryptocurrency is that a lot of big investors, including institutional investors[5], have started investing in cryptocurrency. Especially in Bitcoin. In 2019 and 2020, this institutional involvement has accelerated quickly. An example of this is the asset manager Grayscale Investments which primarily manages cryptocurrency investments for institutional investors[5]. From Grayscale’s quarterly reports, you can see that the amount of new money invested in cryptocurrency through Grayscale has roughly doubled almost every single quarter in 2019 and 2020.

In addition, a growing number of acknowledged major investors are publicly speaking about their cryptocurrency investments. Some of the most prominent investors in this case are the billionaires Paul Tudor Jones and Chamath Palihapitiya.

The reason that all these investors buy Bitcoins is obviously because they expect high returns/price increases.

Further advancement

This positive institutional advancement seems to be continuing. E.g. several well-known asset managers are moving into the cryptocurrency market. One of them is the huge Fidelity Investments which has $2.5 trillion assets under management.

The opportunity to invest in Bitcoin is also on the way to more traditional exchanges. E.g. the large German stock exchange Xetra.

These examples, along with many others, increase the potential for institutional exposure to the cryptocurrency market.

Major financial players provide more stable growth

The fact that more institutional investors[5] are getting into cryptocurrency will contribute to increasing prices and likely contribute to more stable price growth since institutional investors[5] typically invest more long term than retail investors[6] do. In other words, they do not completely sell out due to big or small price declines as often as retail investors[6] tend to.

The future of cryptocurrency

How much will cryptocurrency increase in value?

How much cryptocurrencies will increase in value over time is impossible to determine but according to the past, cryptocurrencies has been the world’s best performing assets during the time cryptocurrency has existed. Thereby, you can possibly expect something similar to apply in the long-term. In the short term, however, it is very difficult to determine as the markets are very volatile since they are still relatively small.

A good visualization of the size of the cryptocurrency market can be found here. However, the fact that the market is still small also means that it has a much greater growth potential than other markets that are already large.

What do the experts say?

Most crypto-experts seem to agree that the prices will rise in the longer term but disagree on how much. However, most estimates for Bitcoin’s price by the end of 2021 are at least $50,000. One of the most well-known and historically accurate models for predicting Bitcoin’s price is called the Stock-to-Flow[7]. According to this model, Bitcoin’s price will average around $100,000 after Bitcoin’s halving[1] in 2020 until Bitcoin’s next halving[1] in 2024, after which the average price will rise again. You can see a visualization of the Stock-to-Flow[7] model here where it is compared to Bitcoin’s actual price.

In addition, many experts expect that cryptocurrencies linked to the new DeFi (Decentralized Finance) will experience exceptional price increases in the near future.

We are in the beginning of blockchain technology

It is also important to point out that the blockchain technology[8], cryptocurrency is based on, has only been around for a decade, and therefore, it has not achieved wide adoption in the world yet.

The blockchain technology[8] is obviously superior in many ways compared to existing technologies. (Not just for creating mediums of exchange like Bitcoin). Therefore, it is likely to have a greater significance in the future than it has today.
Glossary
[1]halving
When the dividend to miners paid in newly created cryptocurrency, (e.g. Bitcoin), is halved. With Bitcoin, it has happened 3 times before. In 2012, 2016 and 2020. These supply halvings are usually followed by increasing prices.
[2]correction
When a price declines before it continues its upward direction.
[3]market value
Total number of an asset existing multiplied by the value of the asset. (Also called market capitalization).
[4]bullish
Refers to an optimistic/positive outlook of a market where the prices are expected to increase.
[5]institutional investors
An entity which pools money to invest in assets or originate loans. E.g. banks, insurance companies, pensions, hedge funds, etc.
[6]retail investors
An individual who purchases assets for his or her own personal account rather than for an organization. Retail investors typically trade in much smaller amounts than institutional investors.
[7]Stock-to-Flow
A price model defined as a relationship between production and current stock.
[7]blockchain technology
A technology that serves as a growing list of records, called blocks, that are linked using cryptography. This list of records, (transaction ledger), is by design resistant to modification of the data it contains. Was invented in 2008 by Satoshi Nakamoto (Founder of Bitcoin).
3 in a circle

How to utilize cryptocurrency?

Guidance and suggestions of where and how to buy, earn, transfer, and store cryptocurrency
Follow us on Facebook
Copyright © 2020 Into The Coins
Email: support@intothecoins.com

The information contained herein is for informational purposes only.
Nothing herein shall be construed to be financial advice.
Take this information and do your own research.
Updated July 26th, 2020
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