How to invest in Bitcoin in 2024: getting started

Hey you! Yes, you! Have you heard about Bitcoin? Of course, you have, that's why you are reading this.

But, are you just watching from the sidelines? Don't you want to get in on the action?

Bitcoin has been on everyone's mind, especially of late, and it's for a reason...

Wondering how to invest in Bitcoin and why it's worth considering in 2024?

First, the Bitcoin Spot ETF got approved recently on 10th Jan 2024 by the SEC; this means that now even traditional investors can get in on Bitcoin trading. In fact, in the first week after the Bitcoin Spot ETF was approved, the 11 approved ETFs registered a total trading volume of $14 billion.

Second, the upcoming Bitcoin halving in April 2024 is expected to boost Bitcoin's price since the reward for miners will be cut into half. Previous halvings have always been followed by a surge in Bitcoin's price.

Lastly, did you know that there are lesser-known, powerful and low risk ways to invest in Bitcoin such as DCA (Dollar-Cost Averaging)?

You'll shortly learn about these and more, but first, what is Bitcoin really and what are its risks?

What is Bitcoin

In case you don’t know what Bitcoin is, it is a digital or virtual form of currency, also known as cryptocurrency, invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto. It operates on a decentralised technology called blockchain, which records all transactions across a network of computers. Unlike traditional currencies, Bitcoin isn't issued by a central bank or government, making it immune to government interference or manipulation.

Risks of investing in Bitcoin

Investing in Bitcoin, like any other investment, comes with its own set of risks. Here are some of the main ones:

1. Volatility: Bitcoin and other cryptocurrencies are known for their extreme price volatility. The value of Bitcoin can fluctuate wildly in a very short period, leading to potential financial loss.
2. Regulatory risk: The legal status of Bitcoin varies from country to country. Some governments have embraced it, while others have banned or restricted it. Changes in regulation can greatly impact the value of Bitcoin.
3. Transaction risks: Bitcoin transactions are irreversible. If you send Bitcoin to the wrong address, for example, you cannot get it back. Also, if your digital wallet is hacked, your Bitcoins can be stolen.
4. Market manipulation: Cryptocurrencies may be more susceptible to market manipulation than traditional securities. The lack of regulations and relative anonymity of transactions makes the crypto market a target for manipulative tactics.
5. Environmental concerns: Mining Bitcoin requires a significant amount of energy, leading to environmental concerns. This could lead to regulatory action or a reputational risk that impacts Bitcoin's value.
6. Fraud and cybersecurity risks: Cryptocurrency exchanges are often targets for hackers, and there are numerous instances of large amounts of Bitcoin being stolen. Additionally, there is the risk of fraud in the largely unregulated crypto market.
7. Lack of consumer protections: Unlike traditional banking and credit card accounts, Bitcoin users have no recourse if they fall victim to fraud. For example, if your Bitcoins are stolen, there's no entity like a bank to help get them back.

How to invest in bitcoin

Buy through a broker:

The advantage of using a regulated broker like Skilling, with over 60 other major cryptos to choose from, is that it simplifies the process of investing in Bitcoin, through CFDs, making it easier to Dollar-Cost Average - DCA (which is a powerful and less-known crypto investing strategy that you'll learn shortly below).

With Skilling, You also don't need to worry about setting up a digital wallet or dealing with blockchain technology - the broker handles all of that for you, thanks to Bitcoin CFDs (Contracts for Difference). This means you're speculating on the price of Bitcoin without actually owning the Bitcoin itself. It's like betting on the outcome of a sports game - you're not actually playing in the match, but you stand to gain if your prediction is correct.

Also Skilling (a 2023 global award winning CFD broker) is regulated and duly authorised to provide services in multiple jurisdictions, meaning that there are regulations binding the company for the safeguarding of your invested funds.

What does Dollar-Cost Averaging (DCA) Bitcoin mean?

Dollar-Cost Averaging (DCA) is a strategy that involves investing a fixed amount in an asset at regular intervals, regardless of its price. When applied to Bitcoin CFDs (Contracts for Difference), this could help to spread the risk associated with the highly volatile nature of cryptocurrencies.

Here's how you might apply DCA to Bitcoin CFDs to take positions with less risk:

Let's say you decide to invest $200 every month in Bitcoin CFDs, but instead of investing when the price is high, you wait for periods when the price dips to invest. Alternatively, you can place limit orders, which will automatically fill your orders at your desired price of entry.

In the first month (January), the price of Bitcoin is at its peak of $40,000. You hold off on buying.

A few days later, the price drops to $35,000. Seeing this dip, you invest your $200 and buy CFD contracts for 0.0057 Bitcoin.

In February, the price of Bitcoin falls further to $30,000. You again invest $200, this time trading CFDs at0.0067 Bitcoin.

In March, the price of Bitcoin rises back up to $40,000. You stick to your plan and wait for a dip. When the price drops to $36,000, you invest another $200, tradingCFD contracts at 0.0056 Bitcoin.

In this scenario, you've invested $600 over three months and have CFD contracts representing approximately 0.018 Bitcoin. The average cost of your Bitcoin CFDs would be about $33,333 ($600/0.018), which is lower than the price in any of the three months. By waiting for price dips, you've reduced your average cost even further.

This strategy requires patience and discipline, as you must resist the urge to buy when prices are high and stick to your investment schedule. It's also important to note that while DCA can help mitigate some risk, it does not guarantee profits or protect fully against losses in declining markets.

Trade Bitcoin & 60 other cryptos with Skilling, enjoy 0.0001 spreads

1. Create an account: Visit the Skilling website and sign up for an account or log in.
2. Deposit funds: Once your account is set up, you can deposit funds using your preferred payment method.
3. Start trading: You can now start buying Bitcoin CFDs. To use the DCA strategy, decide on a fixed amount that you want to invest at regular intervals (e.g., weekly, monthly), and stick to this plan regardless of the price of Bitcoin.
4. Monitor your investments: Keep track of your investments and adjust your strategy as needed. Remember, investing in Bitcoin can be risky, so never invest more than you can afford to lose.

If you’re not ready to start with a real account, familiarise yourself with trading Bitcoin CFDs through our free Skilling demo account, which comes with $10000 in virtual funds, meaning no real money is needed from your end.

Conclusion

Investing in Bitcoin is not rocket science, but it does require some research and proper risk management. Do your homework, choose a platform you can trust for trading. As with any investment, there are both risks and rewards. But with Bitcoin predicted to increase in value after the upcoming halving in April 2024 and the availability of new trading options, thanks to the recently approved spot Bitcoin ETF, this could be your chance to dive in and make some moves on Bitcoin before everyone else.

Want to learn more about how to trade Bitcoin?

Are you still confused about how to trade cryptos like Bitcoin? Head over to our Skilling education center and learn about the basics to trading cryptocurrencies like Bitcoin. It's all free to use the resources. Want to try them out?

Learn how to trade Bitcoin now

Past performance does not guarantee or predict future performance. This article is offered for general information and does not constitute investment advice. Please be informed that currently, Skilling is only offering CFDs.