22.01.202111:03 Forex Analysis & Reviews: Why do people buy bitcoin despite its high price?

Long-term review

Exchange Rates 22.01.2021 analysis

People are attracted by stories of newly minted bitcoin millionaires. In addition, traditional financial companies are starting to invest in digital currencies. Therefore, more and more new people are coming to the cryptocurrency market.

Novice investors buy cryptocurrency to follow the trend. They invest a small portion of their savings in the asset. There are a lot of people who feared the first cryptocurrency, considered it to be something dangerous and did not buy it while it was very cheap. Now those who were not afraid have become millionaires.

2020 has been a phenomenal year for many assets. Many people have started trading stocks on their own, taking advantage of commission-free trades amid the coronavirus pandemic. Bitcoin rose sharply at the end of last year. This trend continues. Bitcoin peaked at nearly $42,000 in early January.

More than 530,000 new accounts were registered in the first 17 days of 2021, according to the Israeli-British investment platform eToro Ltd. Moreover, the number of new users on the platform who invested in cryptocurrency for the first time has grown by more than 100% compared to 2020.

In order to calm the bitcoin hype, financial regulators and banks are issuing strong warnings. So, for example, the British financial regulator said that people should be prepared for the fact that they may lose all their money. And UBS reminded investors that bitcoin is risky and could go to zero, giving Myspace and Netscape as examples.

Bitcoin's appeal was supported by the fact that people were suddenly able to buy and sell things with Bitcoin on Paypal.

Some financial advisors note that it would be safer if clients invested no more than 5% of their investments in cryptocurrencies.

On the one hand, bitcoin's advantage is mainly that it will replace traditional banks and brokers. On the other hand, many people who buy bitcoin are willing to store it in the bank because there are no suitable alternatives.

Some investors see bitcoin as part of a long-term strategy and intend to give this investment to their children, assuming that the price of bitcoin will double in value.

Meanwhile, today bitcoin is trading at $31,338

Exchange Rates 22.01.2021 analysis

Kate Smirnova,
Analytical expert of InstaForex
© 2007-2021
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