Why Is Bitcoin A Double-edged Sword Investment?
Why Is Bitcoin A Double-edged Sword Investment?
Updated: May 14, 2023 22:15
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Crypto currencies. Image source: FREEPIK
Bitcoin is one type of cryptocurrency or digital currency with the largest capitalization in the world. However, bitcoin investment has a higher risk than other investments. One of the biggest risks in investing in bitcoin is its volatility. Bitcoin price changes are so fast that they can change overnight due to several factors such as Monetary Policy and Tokenomics, Production Costs, Demand for Blockchain Technology, Mass Adoption by Retail and Institutional Investors, Inflation Currency Price or Depreciation of Fiat Currency, Government Regulations. and others
One example we can take in the fall in the value of bitcoin is when a bank in America went bankrupt on March 10 and caused the demand for bitcoins in the following 4 days to increase by 8.83 percent according to the indodax market on Tuesday 14 March 2023 at 11.00 WIB which is now for price of IDR 372 million.
According to Indodax CEO Oscar Darmawan. The Silicon Valley Bank case has caused many investors to direct their money to crypto assets, especially bitcoin as a hedge asset. From the cases above, we can see that the case of Silicon Valley Bank may cause investors to divert their funds to crypto assets to avoid the effects of the bankruptcy of Silicon Valley Bank.
The example above is the rise in the price of bitcoin. What about bitcoin price swings that go down? One example we can take is the fall in the price of bitcoin on May 12, 2023 and touched 397.8 million or 3 percent in the last 24 hours. One of the main reasons is due to the increase in the price of bitcoin transactions which reached their highest level in the last two years. Data from bitinfocharts shows that the price of making transactions on the bitcoin network reaches Rp. 456,501.
The conclusion of this article is that investing in Bitcoin has a high risk compared to other investments due to its high volatility.
Bitcoin price changes are very fast and can change overnight because they are affected by several factors such as monetary policy, tokenomics, production costs, demand for blockchain technology, mass adoption by retail and institutional investors, inflation of the price of the currency or the depreciation of the fiat currency. , government regulations and others. We can also start learning how to predict bitcoin prices by starting to look at the state of our world. We must be able to see the state of our world, lest we invest without understanding the state. if there is a chance we should take it so that we don’t regret it in the future.
Bibliography
Liputan6.com. (nd). Bitcoin Price Slides Below Rp. 398.5 Million for the First Time Since March 2023. Released from
https://www.liputan6.com/crypto/read/5284425/harga-bitcoin-melungat-turun-di-bottom-rp-3985-juta-pertama-kali-sejak-maret-2023
tempo.co. (nd). Silicon Valley Bank Goes Bankrupt, Bitcoin and Crypto Prices Soar. Retrieved from
https://bisnis.tempo.co/read/1703276/silicon-valley-bank-bangkrut-harga-bitcoin-dan-kripto-naik
Glints. (nd). 5 Bitcoin Investment Risks You Should Be Aware of Retrieved from
https://glints.com/id/lowongan/risiko-investasi-bitcoin/
