You’ve probably heard of the phenomenon of the Bitcoin millionaire by now. Hell, maybe you’ve even met one. You know, that guy who’s all like, “Should’ve listened to me back in 2009 when I was telling you to buy Bitcoin.” And I know you probably hate to admit it, but he was right.
If you had invested just $100 in Bitcoin in, let’s say, October of 2010, it would’ve got you 1,000 Bitcoins. And with the price of a single Bitcoin sitting at over $38,000 today, that means your investment would be worth over $55 million right now. Talk about 20/20 hindsight.
The massive boom in Bitcoin’s price behind us, and you might think that becoming a millionaire off of Bitcoin investments is impossible today, but that might not be entirely true. In this article, I’m going to tell you about some Bitcoin investing strategies that just might make you into a millionaire.
This is how to make a million with Bitcoin! Let’s go!
The History – Bitcoin’s Past
Before we look at how you just might make a million dollars with Bitcoin, let’s take a brief look at its history and just what exactly brought us to the point we’re at today. You can’t predict the future if you don’t know the past.
Back when Bitcoin came out back in 2009, it was primarily a digital currency used to buy illegal substances on the dark web. I’m talking about the Silk Road, which has been shut down and reappeared a bunch of times. I’m not buying drugs online, so I don’t really know the whole story.
But, after the price of Bitcoin fluctuated around the $300 range for a few years when it was still in the “drug-buying” phase, it jumped all the way up to around $16,000 in 2017 as people began to realize its potential for other uses.
Then, in the next few years, it dipped back down and fluctuated somewhere around the range of $3,000 to $10,000, until 2020, when the price made an absolute moonshot. The price started to go up around $20,000 toward the end of 2020, and that trend seems to be getting even crazier, as it’s gone up as high as $64,000 in 2021.
Bitcoin has become so popular that even large institutional investors and huge companies like Tesla are starting to take positions on Bitcoin, which means that the price could go up even more. What’s the ceiling for Bitcoin’s massive price surge? No one really knows yet!
So, if you’ve found yourself coming into the Bitcoin game late and you’re kicking yourself for not investing 10 years ago, don’t give up hope yet because there is a chance that you could still see some major returns by investing in Bitcoin.
But, before you dump every cent you have into this crypto, let me just run a couple warnings by you.
Possible Risks – The Downside
While there is the possibility that the price of Bitcoin could continue to go up quite a bit, there’s also a large risk involved with investing in Bitcoin. For one, the price of Bitcoin fluctuates wildly. It’s way more volatile than most stocks, which means that if you get in at the wrong time, it could end up costing you a whole lot of money.
There’s also the chance that the massive price surge in 2020 has created a Bitcoin bubble, which means that Bitcoin has currently become way overvalued. If this is the case, then eventually Bitcoin’s price will correct itself and fall way down, which could mean massive losses for anyone who holds an investment in it.
Cryptocurrency is still a very new thing in the world of investments and no one really knows if it has long-term staying power. Crypto-fanatics will try to tell you that it’s the future, and it just might be, but are you willing to risk your financial future based on the opinion of someone who spends their whole day reading threads on Reddit and considers that sound financial advice? I wouldn’t.
I would suggest putting most of your money into much less risky investments like index funds and ETFs and letting them grow consistently over time rather than betting the kitchen sink that Bitcoin is going to blow up again. The truth is that it’s just too early to tell.
With all that being said, let’s have a little fun imagining, and talk about how you could potentially make a million on Bitcoin today in 2021.
How To Make Money With Bitcoin – Quest for a Million
If you want to make money with Bitcoin, there are two ways to do so. The first way is to mine Bitcoin, which basically involves solving a series of complex math problems that, if you’re able to successfully complete, you get rewarded with Bitcoin.
Unfortunately, this field has pretty much been taken over by companies, most of them in China, with massive supercomputers and ungodly amounts of processing power. So, if you’re new to the world of Bitcoin, you basically have no chance in hell of beating them out.
So, let’s look at the other way that you can make money with Bitcoin: trading. To trade Bitcoin or any other crypto, you have to go on an exchange like Coinbase, eToro, BlockFi, and Robinhood even supports crypto trading these days. From there, it’s basically like you’re trading a highly volatile stock.
What do you want to do? Buy low and sell high, obviously. There are two basic strategies for this.
First, there’s short-term day trading, which involves buying and selling Bitcoin on the same day. Basically, you try to predict the point in the day when the price is going to be the lowest, buy up a bunch of Bitcoin, and hope that it goes up. If it goes up, then you sell it off for a profit. This strategy may seem easy, but it’s actually quite risky and a lot of people lose a lot of money doing it. On any given day, Bitcoin can lose like 10% to 20% of its value, which could mean massive losses for anyone trying to day trade it.
The other strategy for Bitcoin trading is to “go long” or what people on the internet like to call HODLing. This strategy means that you buy Bitcoin without paying too much attention to what its price is on a given day and you just hold onto it for the long term.
If you’re a believer that one day we’ll be paying for groceries with Bitcoin, that Amazon will start accepting Bitcoin online, and that foreign exchange dealers and market makers will one day start trading Bitcoin, then this is the strategy for you. It’s also the strategy I’d recommend if you’re just worried you’re going to miss out on another price boom.
Will it make you a millionaire? Let’s see.
Will Bitcoin Make You a Millionaire? – The Bottom Line
When you get down to brass tax, Bitcoin is probably never going to make you a millionaire if you’re just investing in it now. I wouldn’t expect to see any kind of price surge like we saw from 2010 to the end of 2020 ever again. Some analysts at major hedge funds have predicted that the price of Bitcoin could go up to $100,000 or even as high as $400,000 by the end of 2021, but then there are other analysts out there that think that the current Bitcoin price is a bubble that’s destined to pop very soon.
But, let’s say for the sake of imagination that Bitcoin hits $400,000 by the end of the year in the absolute best-case scenario. At Bitcoin’s current price of around $38,000, you would have to invest about $95,000 in Bitcoin right now for it to turn into a million dollars. That is a huge amount of capital to throw at an investment so risky.
Sure, big companies are putting way more money than that into Bitcoin all the time, but they’re big companies with highly diversified portfolios. They’ve done tons of financial analysis and they know that, if Bitcoin tanks, they’ve hedged their bet with their other investments.
So, what should you do? Pretty much the same thing that these big companies and hedge funds do, just on a smaller scale. If you want to diversify your portfolio by investing in some Bitcoin, do it, by all means. Just don’t throw your entire life savings at Bitcoin in hopes that it’s going to make you a millionaire.
Hey, it could make you a millionaire, or it could make you dead broke. It’s just too early to tell.