Remember that time in 2017 when JP Morgan CEO Jaime Dimon called bitcoin a “fraud” that is only good for criminals? Of course, it wasn’t long before he had to backtrack into admitting that those unflattering remarks were indeed out of place.
Fast forward to January 2021 and the banking heavyweight, still under Dimon’s leadership, is now speaking in favor of bitcoin investment. In fact, JP Morgan recently predicted that bitcoin could eventually rise to the tune of $146,000 per unit in the foreseeable future.
That is just one of many good examples that even the harshest of bitcoin critics out there have been forced over time to acknowledge that the benchmark-crypto is here to stay, despite all the challenges and cynicism thrown its way.
That said, bitcoin is still a volatile asset relative to most conventional investment choices that most investors are used to. So, it is hardly surprising that a lot of relatively new bitcoin investors are currently asking whether or not they can count on the current bull run that pushed the BTC/USD pair all the way up to $40,000 earlier this month.
We hope that by the time you’re done reading this article, you’ll have developed a fair bit of an idea about what is causing the bitcoin price to increase rapidly of late, whether or not BTC makes a good investment choice in 2021, and how you can buy bitcoin safely using debit and credit cards, among other payment options.
Let’s address all of these one-by-one.
Why is BTC Surging?
As always, it is somewhat difficult to come up with a single unifying theory behind bitcoin’s magnificent rise in 2020, particularly in the final quarter. (For those out of the loop, the BTC price surged from mid-$11,000 in late October 2020 to more than $40,000 in early January 2021).
That said, most experts believe several factors could be at play behind bitcoin’s 400%+ increase over the last 12 months.
- Bitcoin whales. For example, cryptocurrency exchange Kraken highlighted in a recent report that bitcoin “whales” accumulated a rather large number of BTC in December, pushing the price to new all-time-highs.
The report noted: “Bitcoin ‘whales,’ addresses with more than 100 bitcoin, accumulated an additional 47,500 bitcoin amid bitcoin’s ruthless rally throughout December.”
This bulk purchase probably played a major role in the sharpest growth phase of the current bull run.
- The dollar dilemma. On a slightly larger time-scale, inflation and gradually decreasing purchasing power of the dollar amid the massive COVID-19 stimulus spending is believed to have driven many investors to store-of-value assets like bitcoin.
Note that bitcoin is inherently a deflationary asset due to its mining reward halving mechanism. Bitcoin has a fixed supply of 21 million, which means there will never be more than 21 million bitcoins.
Since the number of new coins entering circulation decreases by 50% every four years, the resulting dip in supply typically leads to a sharp rise in the BTC price. We have witnessed a sharp post-halving price increase in all three halving events so far — first in 2012, then in 2016, and now, in 2020.
(Further reading: BeInCrypto’s Quick Guide to the 2020 Bitcoin Halving)
- Institutional investment. As discussed above, the idea that bitcoin can be a far better alternative as a store-of-value asset has gained traction in the investor community. This has led to a growing number of institutions, both private and public, to expand their BTC portfolios.
As of this writing, nearly 1.2 million BTC have been purchased by institutional investors, which collectively amounts to over $42 billion USD.
Investment of this magnitude from the biggest players in the market creates a sort-of a ripple effect which further adds to bitcoin’s growing stature as a hedge against inflation. This also helps the Bitcoin ecosystem to evolve and become more mature, which then adds to its stability by reducing volatility over time.
Bitcoin Investment in 2021: The Opportunities
Of course, it’s still too early to make any definitive predictions. However, bitcoin’s impressive performance over the past few months, coupled with relatively strong fundamentals, have helped the asset make a strong case for itself in 2021.
In fact, bitcoin was the best-performing asset in 2020. For perspective, it outperformed the combined gains of gold and the Dow Jones stock market by at least ten times. It was the best performing commodity in 2019, too.
As you can see, bitcoin has consistently been the top-performer over the past couple of years. With the global economy currently not in its best shape due to COVID-19 and other factors, bitcoin’s relative dominance is unlikely to come under any threat in the foreseeable future.
Also, it’s worth noting here that judging by historical data, the full extent of a halving event’s impact on the BTC price tends to take up to a year or more. For example, the BTC price first time crossed the $1,000 milestone nearly 12 months after the first halving event in November 2012.
Similarly, the halving event in 2016 seemed to have paved the way for the 2017 bull run that eventually saw the BTC/USD pair surging all the way up to nearly $20,000 in Dember 2017 (a new ATH).
Proponents of bitcoin’s stock-to-flow model believe that the 2020 halving will have a similar impact. The last bitcoin halving took place in May 2020.
3 Popular Ways to Buy Bitcoin in 2021
There are several ways you can buy bitcoin using different payment methods. In the end, it all depends on your personal preferences.
- Crypto exchanges. Cryptocurrency exchanges continue to be the most popular means of purchasing bitcoin for the average investor. There are hundreds of cryptocurrency exchanges and trading platforms spread all over the world, each with its own unique set of merits and demerits.
Ideally, you should opt for an exchange with robust security, quick transaction times, and a proven track record of being customer-friendly. While industry heavyweights such as Coinbase are popular, many new investors are usually turned off by their rigorous KYC verification (read: lack of privacy), high fees, and longer transaction times.
This is where relatively new exchanges like Xcoins make a notable difference by promising much-enhanced user-friendly features including:
– Quick KYC verification.
– Multiple payment options, including the ability to buy bitcoin using debit cards, and credit cards.
– Quick fund deposits (typically 15 mins or less).
– A clean track record in terms of security. - Bitcoin ATMs. Bitcoin ATM is one of the most privacy-friendly ways to buy bitcoin. They do not require any KYC verification and you can operate one almost as easily as any regular ATM (just make sure to have a working BTC wallet handy before you make the purchase).
The downside is, there are not many of them outside a few regions in North America, Europe, and Asia.
- Peer-to-peer purchase. You can use P2P marketplaces like LocalBitcoins to purchase BTC directly from a seller. The average trading fee on such platforms is usually low and they offer a greater degree of privacy to both buyers and sellers. However, you have to be constantly on the lookout for scammers and unreliable sellers while using a P2P platform. Also, if the BTC market is too illiquid in your country, you may have to handle the additional issue of a high bid/offer spread.
Overall, all these factors combined, if you are relatively new to the crypto space, experts recommend that you start with small amounts by buying bitcoin from trusted and user-friendly exchanges like Xcoins. As discussed above, you have several safe payment options to choose from, and the funds are deposited into your account within 15 minutes of payment approval, without requiring any additional steps.
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