How Much Bitcoin Should You Buy: 5 Factors to Consider in 2023
Do you know the simple difference between successful cryptocurrency investors and those who aren’t in 2023?
The successful ones got started.
When you invest in Bitcoin and cryptocurrencies for the first time, you are overwhelmed with questions:
- Is Bitcoin a good investment?
- What is the best way to buy Bitcoin?
- What’s a solid Bitcoin investment strategy?
- How much to invest in Bitcoin?
These questions can confuse you and prevent you from getting started.
This is why I’ll share my experience, advise on how much you should invest in Bitcoin, and guide you on how to ease the process of getting started.
Note: In this guide, I’ll consider Bitcoin and other cryptocurrencies as the same asset because I believe in cryptocurrencies – not only Bitcoin.
Disclaimer: This ad promotes virtual cryptocurrency investing within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile and unregulated in most EU countries—no consumer protection. Tax on profits may apply. Investments are subject to market risk, including the loss of principal. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.
How Much Should You Invest in Bitcoin?
How to Invest in Bitcoin? You should invest around 5% to 30% of your investment capital in Bitcoin. 5% to be very safe and 30% to be pretty risky. I sit between 15% and 50% most of the time.
This is because I have a background in gambling (I am a former professional poker player) and feel exceptionally comfortable losing money. I would not recommend anyone invest 50% or more.
Ultimately, the decision is yours. Although it depends on market factors, it also depends on personal characteristics such as your risk tolerance and the amount of money you can afford to lose.
Still, Worrying About Making The Wrong Decision?
If you’re still afraid of investing in your first pieces of Bitcoin, follow this advice that will help you get started smoothly:
- Invest even $10 on any recommended cryptocurrency exchange or broker. This way, you’ll get started and better understand what it is to be a cryptocurrency investor.
- Divide the budget you had in mind and invest it over some time -. 1 month, three months, 12 months – it’s your call. But doing so will prevent you from making costly mistakes and save you money.
- Remember that you can still reevaluate your decision in the future.
- Choose the best platforms to buy Bitcoin. But before that, make sure you’ve read and digested the best possible ways about What is the best way to buy Bitcoin. I’ve compiled the list of my favourite exchanges below to simplify it.
Crypto Available
Binance
9.90
Bybit
Kraken
9.45
Now, let’s dive into my cryptocurrency-related recommendations, specifically, five factors you should consider when deciding how much to invest in Bitcoin and the best way to invest in Bitcoin.
Factor #1: Risk tolerance
The crypto market is very volatile.
So, when considering how much you should invest in Bitcoin, think of an amount you feel comfortable losing entirely.
Think of how much you want to invest. Picture this amount, and imagine yourself in the future:
- Will you feel comfortable losing your entire investment – say $12,000?
- Will you judge yourself severely because you decided to invest? Will you lose sleep or even consider suicide?
If the answer to any of these questions is even “maybe yes,” you need to lower the amount you had in mind and ask yourself the same questions again. If you’re unsure of your answer, invite your friends and family.
Investors who invest too much money will also be tempted to ‘panic sell’ at a loss. Selling at a loss can be the right decision sometimes, but only if the decision is rational – not emotional.
Keep the amount you invest at a level that doesn’t affect your judgment.
Factor #2: Profit tolerance
Although it can seem like stupid advice at first, think about it: if you invest an amount that can get you highly emotional when you lose it, what will happen if you x20 your money?
This happened to many investors in late 2017 when cryptocurrency was booming. They became millionaires because they made the (poor) decision to invest their life savings.
But if they were too greedy to be reasonable about their investment, do you think they sold their positions and took their profits? Actually, there are better ways to invest in Bitcoin. Most of them returned to where they were during the 2018 market crash.
Only reasonably-minded investors end up making profits with Bitcoin and cryptocurrencies.
So, once again, think about the amount you plan on investing. How will you behave if it’s worth 20x its initial value in one year?
- Will you rent a bigger apartment? Buy a fancy car?
- Will you fall in love with your cryptocurrencies and hold them until you die?
So, how do you invest in Bitcoin? Once again, investing an amount you’ll feel emotionally detached from is essential, whether your assets go up or down. It will make you a solid investor who will lose less money when the market goes down and profit more when it goes up.
Read more: The 5 Best Places To Buy Bitcoin
Factor #3: Timing
I bet you’ve heard much more about cryptocurrencies when Bitcoin’s price was booming, as opposed to when it’s declined or stabilised. This is because people and media alike naturally tend to follow existing trends.
But do you know that the cryptocurrency market is made of repeated market cycles? These market cycles often last for 1 to 2 years. Prices surge fast, creating bubbles. BIG bubbles. And then, these bubbles burst severely.
Source: tradingview.com
This is why timing is crucial in cryptocurrencies. It can completely change your journey and how you’ll look at it.
As a result, when deciding how much you should invest in Bitcoin, look at where we’re now in these market cycles, and you will find the best way to invest in Bitcoin.
To find out this information, open the global market chart of CoinMarketCap. Look at it closely, and answer the following questions:
- Are we close to the market’s all-time high?
- How long since we experienced a market bull run?
The closer we are to the market’s all-time high, both in terms of price and time, the less you want to invest. On the other hand, if the current price is $5,000 and the highest price was $20,000 two years ago, then it should be a better time to invest in Bitcoin.
Don’t get me wrong: even though we’re in the middle of price surges, investing money in cryptocurrency right now is not bad because it gets you started. The timing should only change your entry approach and lower/increase the amount you had in mind initially.
Factor #4: Change of mind
I’ve never seen any cryptocurrency investor say, “I’ll invest $X in cryptocurrencies,” and stick to his/her words. People change their minds naturally, even more so when confronted with an ever-evolving market.
Source: imgflip.com
So, before you decide how much to invest in Bitcoin, leave room to change your mind. The easiest to go about this is to divide your investment over time. Consider the amount, and invest it within 3, 6 or 12 months.
You want to invest $12,000 over the next 12 months. But the market is currently close to its all-time high. Instead of investing $1,000 monthly, you can adjust the amount to $400 and invest more to compensate when the prices go down, which is how to invest in Bitcoin.
Factor #5: Diversification
Diversification is a technique any mature investor uses to reduce the importance of luck. It means you will invest in cryptocurrencies and allocate your capital to different investment vehicles, such as real estate, stocks, and gold.
You can also leave some money at your bank to earn a small interest rate.
All in all, don’t put all your eggs in your cryptocurrency basket. It would be like playing roulette martingale. You’ll win, win, and win, but you lose everything when you lose.
Diversification also applies to your cryptocurrency portfolio. Find out the 10 Best Cryptocurrencies To Buy Right Now
What’s the Minimum Bitcoin Investment You Can Make?
You need to buy no minimum amount of Bitcoin to get started. The only minimum is the one set by the platform on which you’ll invest in your first pieces of Bitcoin. For example, Coinbase allows a minimum Bitcoin investment of $2.
However, I do not recommend buying such a small amount of Bitcoin because exchange platforms charge fees for buying, selling and transferring cryptocurrencies. These fees will kill your investment quickly if you decide to go for the minimum investment.
All in all, investing in a minimum of 50 $; even if you can support lower amounts, that should be your Bitcoin minimum purchase.
