How To Buy And Invest In Bitcoin (BTC) in 2020

Learn how to Buy And Invest In Bitcoin in 2020.
Author: Edith Muthoni
Last Updated: February 20, 2020
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Back in 2014, around the same time Bitcoin and Cryptocurrency terms were peering into the world of finance, the most you could do with 10,000 BTC was buy a Pizza.

Less than 5 years later, the value of a single bitcoin has soared to hit the peaks of $20,000. The success of the digital currency has inspired the formation of a new global industry, the cryptocurrency industry,which threatens to take on the mainstream banking and finance sector.

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    And in its wake, it has left a trail of successful investment tales. Numerous individuals and institutions have amassed considerable wealth because they stuck with the legacy alternative coin from early on.

    The past few years have seen it assume numerous titles, key among them being an acceptable payment tender adopted by most ecommerce as well as main street stores.

    It has, on one hand, sparked national and international debates around the viability of the coin and the ramifications of its adoption as a legal tender. On the other, it has birthed an investment rush where every investor now wants a piece of the highly lucrative coin. The uncontrolled demand and the ever condensing supply of the commodity have in turn led to never-seen-before market volatility that saw bitcoin gain 10000%+ in value in one year and shed as much in the next.

    Industry experts, however, believe that the most unpredictable phases of bitcoin as an investment tool are over and that it is nearing stabilization. In such a case, and with the proliferation of ways in which you can acquire the coin safely, one might argue that there probably will never be a better time to invest in Bitcoin. But how do you go about it? We have investigated and found that the easiest, most secure way to invest in Bitcoin is through the well-known broker eToro. Click the table below to get started or read on to find out how to start investing in Bitcoin.

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    Why invest in bitcoins?

    • Portfolio diversification:

    A good investment portfolio should be carefully spread to include virtually every investment vehicle. And this includes bitcoin investments. The portion of your investment that you, however, allocate to the high-risk/high-reward and volatile bitcoin should, however, be determined by such factors as your risk averseness and age. This is premised on the fact that younger investors who have more than enough time to recover from bad trades and negative market turns can have the luxury of risking more compared to seniors who will probably be gambling their pensions and retirement savings.

    • Huge potential for growth:

    Every new day opens Bitcoin to more expansive horizons. It brings forth news about a new ecommerce store or legacy institution embracing bitcoin payments, another country acknowledges crypto trading or another multinational seeking to leverage the digital coins anchor blockchain technology.

    Without downplaying any negativity associated with the coin like the threats of governmental regulation and bans in countries like China, every investor can agree that the strides achieved by Bitcoin far outshine any possible threats. The fact that it still has more ground to cover in this quest to replace modern fiat currencies makes it an excellent long term investment choice.

    • Ease of liquidation:

    Unless you are investing in Bitcoin futures and inspired ETFs, Bitcoin investments may turn out to be the most liquid asset class in your portfolio. This means that it doesn’t tie your funds in long term and highly complicated projects with painfully sluggish opt-out processes. It also means that should you suspect an impending significant downturn you can quickly liquidate your investments here, shielding you from massive losses. This is not possible with such other investments as shares and stocks.

    • Above average gains in the shortest time possible

    Real Estate investments have for the longest time been considered the golden child of investments. In 2018, however, this considered lucrative industry reported a 5% annual growth. Bitcoin has on the hand reported an average 200% gain in the past five months. You will, therefore, want to invest in bitcoin if you are looking for above average gains over the shortest time possible. The only caveat being the fact that you are also faced with the threat of above-average losses over the same period.

    • Hedge against ordinary investments and fiat currencies

    The cryptocurrency industry is so far removed from the national economies that a slip that results in near-catastrophic impacts on the shares and equity markets have little to no impact on bitcoin prices. This makes it the perfect hedge for your shares and equity investments. You can learn how to leverage significant shares and equity losses with short term gains trading bitcoin.

    How to trade bitcoins in 2020

    Buying bitcoins is not an event but a four-part process that starts with identifying where to buy the digital coin, the buy/sell approach, and how to keep it safe. A well calculated trade strategy must also involve constantly watching over the bitcoin markets for hints on the selling point.

    Step 1: Identify where to buy bitcoins

    There are several approaches to bitcoin trading. Some of the most popular, however, include buying from a reputable crypto exchange like eToro, Binance, through a peer to peer crypto exchange site like LocalBitcoins , through a multi-asset brokerage.  And while buying from an acquaintance may easilypass as one of the quickest approaches to acquiring the crypto assets, it is hardly safe, especially when dealing with online strangers. Understand that the biggest and most impactful bitcoin scams today are conducted by the ’sellers’ you meet online and promise to sell you the digital coins at discounted rates. In such a case, there is no way of vouching for their legitimacy or the existence of their coins.

    The proliferation of bitcoin trading scams also demands that you thoroughly vet the authenticity of any of these trading approaches before creating an trader account with a particular broker. Start by checking whether they are licensed by the financial regulatory agencies in the jurisdictions within which they operate. A bitcoin trader in the USA, for instance, should ensure that their preferred bitcoin company is licensed by the SEC and registered with the FDIC.

    Additionally, go through their user reviews from independent customer review websites like BBB and TrustPilot to check their customer satisfaction scores. You would do well to avoid exchanges and P2P platforms with a history of hacks and irrecoverable loss of the client’s bitcoin assets.

    Our recommended platform for buying bitcoins is the well-known broker and exchange eToro.

    Step 2: Decide on your trading approach ( long, short or buy and hold)

    I. Buy and hold

    Buying and holding onto bitcoins for a long term with the hope of profiting from its long term prosperity remains one of the most popular approaches to bitcoin trading. This strategy is adopted largely by individuals who believe that Bitcoin prices will continue to soar in the foreseeable future. This group of traders isn’t bothered by the short term volatilities that are synonymous with the trade. They will just shrug them off as a blip with some viewing it as a necessity in the coins path towards stability. If you are buying and holding onto the coins for the long term, chances are you will be buying bitcoins in bulk. And in such a case, we advise that you consider buying from a highly regulated exchange and store your coins offline in a secure hardware wallet.

    II. Buying Bitcoins and disposing them at a higher price 

    Going long on a bitcoin position can be considered part of day trading and involves buying bitcoins at a low price and selling them off as soon they turn profit or at the end of a bullish price rally. It involves taking advantage of bitcoins volatility to score highest returns on investment in the shortest time possible. And while you could try this and in a conventional bitcoin exchange, the slow processing speeds recorded by most of them make the process painfully tedious. You therefore are better off investing in the more flexible bitcoin CFDs that guarantee near instant transaction processing speeds.

    III. Investing in a Bitcoin CFD

    One of the main advantages of dealing with a Bitcoin CFD over the other forms of Bitcoin trades, is the ability to short sell. Short selling is an advanced form of online trading that involves speculating on the decline or the ultimate collapse of a stock or financial instrument. If you wish to short sell bitcoins, you will want to fist register with an exchange that provides for bitcoins CFDs or crypto-related EFTs. Like taking long positions, short selling involves taking advantage of the bitcoin volatilities and profiting from a bearish run.


    Step 3: Learn how to keep it safe

    Planning for the safety and security of your bitcoins involves identifying a crypto wallet where you can secure your bitcoins. You have the option of settling for the bitcoin hardware wallet or the convenient online and mobile wallet. However, if you chose to trade bitcoin CFDs, chances are you won’t need a wallet. This is primarily due to the fact that CFD involves price action trading and therefore don’t trigger the generation of transactional private keys. Neither does it involve the distribution of actual bitcoin tokens.

    United States residents using eToro to buy and sell Bitcoins will however require the eToro mobile bitcoin wallet for the safekeeping of their tokens. This is available in both iOS and Android operating systems and is also easily accessible on the go. Launched earlier in the year, the wallet seeks to seal most security loopholes wrecking other mobile wallets available today. Chief among this is unauthorized access of the mobile wallets that eToro sought to solve by introducing a two-factor authentication feature.

    Step 4: Identify the price influencers to watch out for

    Prudent bitcoin trading calls for the holding onto an asset for no longer than is necessary. And buying or selling in either eToro bitcoin CFD for international traders or the crypto coin tokens for United States residents is no different. You need to keep an eye out for any factors that may necessitate the liquidation of your bitcoin wallet. These include:

      • Changing market sentiments
      • Major negative news
      • Direct government interference

    Disclaimer: Transacting in virtual currencies is subject to various risks, such as price volatility, and is therefore not suitable for everyone. Your capital is at risk. eToro offers only Crypto (real crypto no CFD) so only buy with no leverage, later on this year eToro will also offer real stocks for trading.

    How to increase your bitcoin investments efficiency

    • Follow the news:
    In the highly unregulated crypto world, major news, whether positive or negative has the biggest impact on the price of the legacy coin.  It is therefore critical that you keep up to date with the global news and learn how to interpret the impact every political or economic event has on bitcoin price.

    • Avoid leveraged trades:

    Leverage is by far the most attractive and also the most destructive aspect of CFD trades. It may lead to above average profits as well as above average losses and lead to negative balances. We advise bitcoin investment beginners to shelve the idea of maxing out leverages or practice moderation until they have mastered the trade.

    • Remove emotion from the equation:

    The biggest investment mistakes most people make is skipping on thorough analyses and investing emotionally. Take time to study such market dynamics as whether the asset is over- or under-valued, consider investors and global sentiments and possible price influencers like impeding major events and announcements.

    • Learn how to protect your investment:


    Challenges rocking bitcoin investments

    • Cyber threats:

    The surge in price for bitcoin and a ready market has attracted investors, scammers, and hackers in equal numbers. The latter are always trying to infiltrate investor’s computers and crypto exchange’s cold wallets in an attempt to gain unauthorized access to the coins stored therein. You can, however, minimize the incidence of hacks by embracing strong antivirus and firewall setting and investing in an impenetrable bitcoin wallet.

    • Uncertainty over regulation:

    The threat of global governments stepping in to regulate critical aspects of bitcoin investments has been dogging the industry for years. Developed nation’s governments like the United States are always sending out mixed signals about bitcoin regulations while others like China have already imposed a total ban on any form of crypto investment and trade. Every time any of this happens, it sends the bitcoin market into a panic mode, causing disastrous volatilities that take months of rebalancing for the market to recover from.

    • Uncontrollable volatilities:

    By now, only the most risk-tolerant investors have dared try the bitcoin investments. The huge volatilities that see the coin gains and lose significant values in minutes have seen most conservative investors shy away from this market. This doesn’t, however, translate to lack of interest, they are only waiting for the trade to gain stability and clearance of the uncertainties rocking the industry.

    • Rouge exchanges:

    The absence of regulation has birthed numerous crypto exchange crooks out to fleece bitcoin investors. Most will set up shop using pseudo names and addresses and fall off the grid later with investor funds and coins. Others have employed underhand tactics like manipulating bitcoin trade volumes aimed at attracting investors barn while others have been accused of engineering self-hacks in order to swindle investor funds and bitcoins stored in their vaults.


    Bottom line

    In February 2016, Bitcoin price was trending around $800, three years earlier one coin was worth no more than a few coins. Today, however, a single coin has shot well above $8,000. This translates to a 10 folds gain in less than three years and 40000%+ gain in the last six years. No other asset class in the history of investments has been able to replicate such growth in such a short period of time. And while you may be tempted to look at this from a conservative investor’s point of view and write such growth as unsafe, you first need to appreciate the fact that that none of the investments in your portfolio is immune to volatilities either.

    More importantly, you need to understand that the above average volatilities the bitcoin investments are exposed to also serve as its biggest benefit. The fact that you can also short a bitcoin price rally ensures that you can use this volatility to multiply wealth in the industry regardless of the market direction.

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    How do I buy my first bitcoin?

    As different bitcoin exchange sites try to outdo each other, they have oversimplified the process of buying your first bitcoin. You only need to sign up with one of these bitcoin trading sites, link it to your bank account and wire in cash. After this acquiring the all-popular digital currency is no more than a few screen taps away.

    What determines the price of bitcoin?

    To a large extent, Bitcoin price is influenced by the forces of demand and supply. The supply has for the largest part been influenced by the speed at which miners have been able to generate new bitcoins while demand is influenced by numerous independent factors. Positive demand has for the most part been influenced by positive news and announcements as well as the adoption of bitcoin by more entities and institutions. Negative demand has on the other hand been influenced by such factors as governmental regulation threats and the rise of bitcoin-related scams and hacks.

    How can I convert my bitcoin investments into cash?

    You can only convert your bitcoin investments into cash by selling it. The sale can be to a friend or acquaintance or established bitcoin exchange sites. These include reputable crypto exchanges that allow for fiat to crypto exchanges and vice versa. We, however, advise that you use the more reputable and highly reliable platforms. Here you can easily sell your coins for cash that you can then invest in profitable and less volatile markets within the platform.

    Is it too late to invest in Bitcoin?

    No. Looking back at Bitcoin’s price history, you will note that the price of the legacy coin rose from a few cents to more than $20,000 in less than five years. While this implies that most early investors already made a fortune investing here, it doesn’t mean that you are too late, you just need to figure out the best entry point. In January 2020, for instance, the price of the coin had dropped to $3,000 but has shot up over 250% in five months to hit the highs of $8,000 in May.

    What can I do with the bitcoin that I already own?

    You can choose to sell it at the current market price or keep it and wait for further price appraisal. Your decision to sell or keep should, however, be informed by a thorough analysis of the bitcoin industry.

    When is the government going to regulate Bitcoin investments?

    This remains to be seen, especially in the United States and Europe. Asian countries have been bolder in making their stand about the digital coins known, with China banning its use within its borders while Japan and South Korea embrace more relaxed legislation that allow it to thrive. This uncertainty and mixed reaction can be attributed to the price volatilities being experienced in the industry.

    All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

    Edith is an investment writer, trader, and personal finance coach specializing in investments advice around the fintech niche. Her fields of expertise include stocks, commodities, forex, indices, bonds, and cryptocurrency investments. She holds a Masters degree in Economics with years of experience as a banker-cum-investment analyst. She is currently the chief editor, learnbonds.com where she specializes in spotting investment opportunities in the emerging financial technology scene and coming up with practical strategies for their exploitation. She also helps her clients identify and take advantage of investment opportunities in the disruptive Fintech world.

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