After a weak October and November, the Bitcoin price is around 20-30 percent below its recent high of around $126,000. For some investors, this seems like the end of the price rally, while others interpret the correction as a typical breather in a volatile market. Anyone who sees Bitcoin as a possible long-term investment could use the current phase to take a more fundamental look at the cryptocurrency and suitable investment vehicles.
itcoin is the first decentralized cryptocurrency. Transactions are not checked by a bank, but by thousands of computers worldwide that jointly operate a blockchain. New blocks are created using the so-called “proof of work” process: Miners solve cryptographic tasks and receive newly created Bitcoins as a reward.
The money supply is limited to 21 million Bitcoins, and the new creation is halved approximately every four years. This limited supply is one reason why many market participants now see Bitcoin as a digital store of value rather than a traditional means of payment. At the same time, the price remains highly susceptible to fluctuations – news, regulatory steps or market sentiment can lead to significant fluctuations.
Bitcoin as an admixture – with staying power
Some investors see Bitcoin as a possible addition to the opportunity-oriented part of the portfolio. Anyone who assumes that demand for a scarce, globally tradable crypto asset could continue to grow is likely to interpret setbacks like the current one as an opportunity to gradually build up positions.
However, it is just as conceivable that stricter regulation, technological developments or a change in sentiment could put the price under pressure for a longer period of time. From a risk perspective, Bitcoin is usually only discussed for a small portion of the portfolio and with a long investment horizon.
Investment idea: Invest in Bitcoin via ETP
Investors who don’t want to manage wallets themselves could take a look at the 21shares Bitcoin Core ETP (Ticker: CBTC, ISIN: CH1199067674). The exchange-traded product is 100% physically backed with Bitcoin, the coins are held in cold storage by an institutional custodian. CBTC tracks the performance of Bitcoin and is one of the more cost-effective solutions on the market with a management fee of 0.10% per year.
21shares Bitcoin Core ETP at finanzen.net
Risk warning: Crypto investments and corresponding ETPs are highly volatile and can lead to significant losses or even a total loss of the capital invested.
Conclusion: Setbacks as a test for your own Bitcoin strategy
It cannot be said with certainty today whether the current correction marks the start of a longer period of weakness or just a stopover in a multi-year upward trend. However, one thing is clear: Anyone considering Bitcoin as a possible component in their portfolio should understand how the cryptocurrency works, take strong price fluctuations into account and only use capital that they can do without in case of doubt.
For investors who believe in the long-term potential of “digital gold” and are looking for a regulated access option, the 21shares Bitcoin Core ETP (CBTC) could be a variant of structured Bitcoin development in the portfolio – as a clearly limited, speculative addition.