Bitcoin Hits All-Time High Of Over $69,000 Before Plummeting; Is It Time to Invest?

Bitcoin on Tuesday briefly reached $69,210, its highest in over two years. However, it quickly tumbled by over 8% to $61,973.20, according to Coin Metrics, on the same day. As of Thursday, Bitcoin hovered at $66,957.40, which is also high considering its performance since the fall of crypto trading platform FTX. 

According to a CNBC report, the new record was imminent as Bitcoin had been on a hot streak, making gains of 45% this year alone. While the resurgence may be tempting for investors, the decision to jump is still a difficult one.

Is it the Right Time to Invest in Bitcoin?

Bitcoin previously notched its highest peak at $68,982.20 in 2021, about a year before the failure of FTX which experts called the Lehman Brothers moment for crypto. While Bitcoin is on a rally in 2024, experts have cautioned that it may soon start to cool down.

“The market is positioned for a steep correction, possibly between 10% and 20%,” CEO and founder of the crypto hedge fund Kbit, Ed Tolson told CNBC. He cautioned that any downward material move will result in cascading liquidations causing the crypto to fall further. However, Tolson mentioned that Bitcoin is expected to perform well at least for the next few quarters but with “sharp corrections along the way”.

Thus, investors need to watch the key themes in the Bitcoin’s narrative that push its price higher. Investors should tread carefully as Bitcoin is known to be volatile.

Here’s How to Do Due Diligence Before Investing in Cryptocurrency

Potential investors should review and analyze market dynamics and liquidity. Real-world adoption metrics, trading volume, volatility, market capitalization, use cases, and historical returns should be ideally reviewed before investing in any crypto asset. Furthermore, along with crypto assets, investors should vet crypto exchanges, wallets, custodial services, or trading platforms and check their track record, security practices, insurance coverage, and compliance with regulatory requirements.

One important factor to review is the cryptocurrency’s volatility, by using risk analysis frameworks Investors should allocate crypto in their portfolio based on their risk tolerance.

Investors should also learn and understand the regulatory landscape. Depending on their location, investors should consider legal classification, taxation policies, investor protections, reporting requirements, and other regulations applicable to the respective crypto asset.

The best thing to do for an investor is to take the approach of a skeptic, especially in projects that promise sky-high returns. If the promoters of the crypto are promising favorable returns, investors should perform a thorough background check considering the ethical decisions of the promoters.

Since the popularity of crypto soared, several projects that are replicants of existing cryptocurrencies and blockchains emerged with different names and terms. It has become increasingly harder to find something new and legitimate.

Most importantly, crypto investors should stay updated with the latest trends in the market and the development of the sector in general. The crypto sector is ever-evolving with new projects and companies frequently refreshing their services and tools. While this is an indicator of innovation and growth in the industry, it may also make it difficult for investors who do not refresh their skills or update their knowledge base.