How to Decide How Much to Invest in Bitcoin

How Much Bitcoin Should I Buy – Top Tips for 2023

Bitcoin remains one of the more tempting asset classes to invest in, given that over the past 5 years, the profitability of this digital currency has gathered more than 300%.

Most of all, bitcoin is currently trading 60% off its past peak of $69,000 in the United States of America, so it is possible to buy the bitcoin cheaply.

But the problem arises: “How many bitcoins do I need to buy?”. Analyze then, to evaluate the more dangerous method of obtaining bitcoin in the present period.

How Much Bitcoin Should I Buy – Key Factors to Help You Decide

At the same time, who exactly asks the problem: “How many bitcoins should I buy?”, it is necessary in the first place to direct interest in the main factors reviewed below.

Discretionary profit 

The presence of a solution to the problem of “How many bitcoins to buy?” the aggregate does not have to be higher than the discretionary profit. – The aggregate never once has to be higher than the discretionary profit.

The conversation is about the bill, which remains after the reimbursement of absolutely all key costs, such as payments according to the mortgage, subsistence, travel, and duties.

Dollar-Cost Averaging 

A tangible policy, which is followed by traders, not prone to risk, is to gradually include funds in Bitcoin at the end of any week or month. This policy is known as dollar-cost averaging (besides DCA/DCA-ing) and also guarantees a graded investment, not a one-time investment.

In addition, the policy of dollar-cost averaging enables traders to exclude excessive connections with one cost (for example, acquisitions at the top of a bullish increase).

Be prone to volatility 

Together with its inception in 2009, bitcoin has delivered unprecedented returns, something that has forced numerous traders to think about, whether bitcoin is considered a superior investment.

But bitcoin runs through ultra-volatile bazaar cycles, as well as its current values are trading 60% off the past all-time high of this numerical asset. For this reason, when evaluating how much to invest in Bitcoin, traders must take into account that the price of investments can significantly decrease in the short-term opportunity.

Hunger for risk 

All investments without exception are combined with a specific degree of notch. But according to the comparison together with the promotions of “Azure chips”, interest rate promotions, municipal bonds, and also real estate bitcoin is significantly more dangerous.

For this reason, traders must take into account that there is a possibility that investing in Bitcoin has a chance to cause the loss of a component or include absolutely all funds.

Do not put all without exception eggs in 1 basket 

One of the best methods of investing in Bitcoin is to divide investments among other assets, as well as numerical, so as well as classical. A popular diversification strategy is to invest in the best altcoins – Ethereum, Litecoin, Cardano, or 10s of others.

Certain besides investing in promotions, real estate, and other assets. In the field of cryptocurrencies, almost all traders evaluate pre-sales of the best cryptocurrencies as a high-potential strategy, because they give access to the latest numerical asset until its release to the exchange.

In the final analysis, the presence of the problem of “How much are we obliged to invest in Bitcoin?”. – a large number of conditions should be taken into account.

Explore then, to find out about certain best strategies that can help you find the best bitcoin investment rate, and also find a solution, no matter how little is too late to acquire bitcoin in 2023.

How to Decide How Much to Invest in Bitcoin

Preparing a salary in cryptocurrency does not necessarily have to be a difficult check. Not only in the case together with bitcoin, but also in absolutely all possible investment decisions must be fully analyzed, what amount of money should be noted.

Even though it is possible to be tempted to bet on Bitcoin because of its unprecedented results in the past, this is in no way a completely appropriate step. Instead, it is better to proceed to Bitcoin and other cryptocurrencies together with caution.

Now I will analyze in more detail, that it is necessary to take into account the presence of the score of this, how much you need to invest in bitcoin to get funds.

An Evaluation of Discretionary Income

Before you make any investment – be it Bitcoin or any other asset class – you need to take a step back and evaluate how much discretionary income you have. 

In a nutshell, discretionary income is the amount of money left over after basic expenses. This refers to everyday expenses such as food and travel, as well as mortgage payments, utilities, and the 401(k) retirement plan. 

Theoretically, anything above this figure is categorized as discretionary income and therefore can be used to make non-core purchases. 

In other words, when evaluating the question “How many bitcoins should I buy?” – the amount chosen should not exceed a certain discretionary income. 

To illustrate, let’s take a hypothetical example:

• Suppose an investor has a monthly income of $3,000 after taxes and Social Security contributions.
• Of this amount, $2,000 is used for basic day-to-day expenses
• $500 is set aside for savings and a 401(k) plan.
• Thus, there is $500 left over.

Now, it is important to note that when considering how much to invest in Bitcoin, you should not allocate 100% of your available free income. 

On the contrary, assuming an investor has $500 at the end of the month, a riskier strategy would be to diversify funds across multiple assets.

Ultimately, the most important thing is to know exactly how much money is left at the end of each month after all expenses are covered. Nothing beyond that amount should be considered when estimating how many bitcoins to buy.

Deploy a Dollar-Cost Average Strategy

An even riskier way to answer the question, “How many bitcoins should I buy?” – is to wait until the end of each month, perhaps a few days before receiving your next paycheck. 

In other words, just before payday, any remaining disposition income, however small, can be used to buy bitcoins and other investments. This is a sensible approach to bitcoin, given that all expenses have already been covered and payday is just around the corner.

This strategy is the same as dollar-cost averaging, also called DCA or DCA-ing. For those not in the know, dollar-cost averaging is the process of investing in an asset on a specific day each month, rather than a “one-off” lump sum. 

This is a tried and tested strategy not only with bitcoin but also with broader stock market indices such as the S&P 500 and Dow Jones.

The reason for this is that dollar cost averaging eliminates the need to try to guess market timing. Moreover, it also reduces the risk of over-reliance on a single price. 

• For example, those who invested a lump sum in Bitcoin in November 2021 for $69,000 would be able to invest in Bitcoin in November 2021. 
• Of course, the loss will only be realized if the investor sells their bitcoin. 
• But still, the investor will remain at a loss until the bitcoin price returns to $69,000.

Now consider the risk-averse investor who follows a dollar cost-averaging strategy. Of course, at the peak of the bull run, monthly investments would have been made at the peak.

However, in the months that followed, as the bitcoin exchange rate continued to decline, each monthly investment would have resulted in a lower cost of capital. 

Let’s look at an example of dollar cost averaging in the context of bitcoin:

Suppose an investor has $600 at the end of each month.

• The investor decides to buy $300 each month a few days before payday
• In months 1, 2, and 3, the investor receives a cost basis of $69,000, $40,000, and $30,000.
• In months 4, 5, and 6, the investor receives a cost basis of $25,000, $20,000, and $20,000.
• Thus, the investor has made six monthly bitcoin investments of $300 each. Due to the dollar cost averaging strategy, the investor received an average cost of $34,000. 

This means that if Bitcoin eventually returns to its former all-time high of $69,000, the investor will realize a 102% return. On the other hand, an investor who bet on Bitcoin’s peak of $69,000 will only be able to break even once it returns to that price point.

Understand the Volatility of Bitcoin

It is almost impossible to accurately predict BTC price movement, but studying historical data and current performance is very important.

Even though Bitcoin trades in a highly liquid market, it is still an ultra-volatile asset class. Much more so than U.S. Treasuries or stocks.

While dollar-cost averaging always offers a chance to weather the volatility of cryptocurrencies over the long term, it’s still important to be aware of the risks this entails. 

• After all, we’ve already mentioned that after peaking at $69,000 at the end of 2021, bitcoin is down 70%. 
• On the one hand, this is not a problem for an investor who plans to buy and hold Bitcoin for years, buying it during downturns and employing a dollar-cost averaging strategy. 
• However, if the investor has invested more than he or she can afford and subsequently has to sell bitcoin to pay for day-to-day expenses, this will result in major losses.

This is why the valuation of discretionary and disposable income should remain a top priority when determining how much to invest in Bitcoin. 

• In addition, beginners should be prepared for the emotional consequences of bitcoin volatility. 
• Many beginners, after seeing Bitcoin drop 25% in two weeks, will decide that enough is enough. 
• That said, panic selling should be avoided when investing in Bitcoin, as long-term investors tend to generate the highest returns.

One of the best ways to combat volatility is to avoid checking the bitcoin price frequently. Beginners are known to frequently check the value of their portfolio several times throughout the day.

Instead, it is better to check the Bitcoin price every month – at the time the next dollar cost-averaging investment is made.

Determine How Much Appetite for Risk is Acceptable

Another important factor to consider is the degree of risk tolerance. It is quite difficult to assess this indicator, as no two investors are alike. 

For example, someone who invests in the S&P 500 every month for several decades can be confident that over time the portfolio value will be healthy by the time they retire.

After all, since its inception in 1926, the S&P 500 Index has delivered an average annual return of 10%. 

However, in the case of Bitcoin, we have only 14 and a bit years of trading history. Therefore, it would be unwise to invest in Bitcoin without considering the risk of loss.

Furthermore, many market commentators argue that the appropriate amount of Bitcoin to buy should reflect the money an investor is willing to lose entirely. 

While this is a somewhat extreme approach, risk mitigation techniques should be utilized. This again ties back to our earlier discussion of dollar cost averaging and limiting investments to discretionary income.

Buy the Dip to Invest in Bitcoin at a Cheap Entry Price  

Many experienced investors seek to increase the size of their stake in an asset when bearish sentiment is evident in the broader market. Bitcoin is no exception in this regard. 

As we have noted many times, bitcoin is currently trading at $27,000, which is 60% below its previous all-time high. This means that, in theory, you could theoretically get a 60% discount if you buy Bitcoin at its current level. 

Even though bitcoin was created in 2009, the digital currency has already weathered several bear markets. Most importantly, bitcoin has always recovered. But just how many bitcoins are on the market? 

Let’s look at the previous bear market as a prime example of why buying dips can be a profitable strategy when investing in cryptocurrencies like bitcoin for the long term:

• After an extended bull run, bitcoin peaked at $20,000 by the end of 2017.
• Bitcoin then entered a prolonged bear market, reaching lows of less than $4,000 just 12 months later.
• Many investors who bought Bitcoin at $4,000 would end up making significant profits. 
• Eventually, just three years later, bitcoin reached $69,000.
• That translates to a profit of over 1,600%.

Buying cryptocurrencies on the decline requires some attempt to time the market. However, buying on dips can be used in conjunction with a dollar cost-averaging strategy. 

This is because the investment will be made each month regardless of what price Bitcoin is trading at. Therefore, when the Bitcoin rate drops, the dollar cost-averaging strategy will still make purchases.

Diversify Across Many Different Crypto Assets in Addition to Bitcoin   

What is the optimal cryptocurrency portfolio allocation in 2023 to minimize potential losses and maximize gains?

Diversification is another proven investment strategy used by experienced investors. Diversification ensures that an investment portfolio is not overly exposed to bitcoin alone.

Of course, Bitcoin is the original, de facto most valuable cryptocurrency. However, it has lagged behind other digital currencies in this area in recent years. 

• This is especially true for pre-sales cryptocurrencies, many of which continue to outperform the broader market. 
• For example, in 2022, TAMA – Tamadoge’s own meme token and play-to-earn ecosystem – had a return of nearly 2,000% after launching on OXK.
• In the first pre-sale phase, investors could purchase TAMA for $0.01 and its price reached an all-time high of $0.194.

As we detail below, there are several solid presales underway and all of them offer immediate upside. The reason for this is that the best upcoming ICOs have a progressive pricing structure.

Why You Shouldn’t Just Invest in Bitcoin – Top Crypto Presales are the Top Crypto Investments  

As mentioned above, one of the best options in the cryptocurrency market right now, especially for those on a tight budget, is to run pre-sale campaigns. This offers attractive upside potential without having to risk significant amounts of money. 

However, cryptocurrency presales should be conducted in addition to more established and liquid digital currencies – such as Bitcoin. It’s about diversification and risk management, which cryptocurrency presales can certainly play a role in. 

Below, we take a look at two of the most trending types of cryptocurrency presales currently on the market:

Bitcoin ETF token – an ERC-20 token speculating on the issuance of bitcoin ETFs, offering huge stakes and skyrocketing presales 

One of the most popular cryptocurrency alternatives to Bitcoin is currently the Bitcoin ETF Token ($BTCETF). This new cryptocurrency speculates on the upcoming emergence of Bitcoin ETFs and offers the latest news and updates on the matter.

Together with the support of the pool pond token holders have all chances to make bets and also to acquire inactive profit.

During this period, the profitability according to the bet reaches 2,650% per time. There are approximately eleven million tokens in the smart contract.

40% of the single-size tokens in today’s period is divided within 10 stages of advance sale, in any of which 84 million tokens are assumed.

In the initial pre-sale stage premature traders have a chance to get $BTCETF as a whole because of $0.005. But by the finishing round, the value will increase up to $0.0068. Because of 2 days already after the basis of presale, there was picked up more than 65 thousand dollars.

Bitcoin Minetrix, a revolutionary Stake-to-Mine cryptocurrency that offers bitcoin mining capacity and high-interest rates for staking, is skyrocketing in pre-sales 

Another cryptocurrency alternative to Bitcoin is currently $BTCMTX, the native token of Bitcoin Minetrix. This cryptocurrency combines two popular cryptocurrency trends – token-stacking and cloud mining.

With $BTCMTX, token holders can access cloud mining credits by bidding on the token. These cloud mining credits are non-tradable tokens of the ERC-20 standard.

To earn the tokens, investors can lock them into an Ethereum-powered smart contract. The credits have no real value but can be burned on the blockchain to earn Bitcoin mining power. 

The Bitcoin mining power earned allows for dedicated time for mining. This will allow access to a percentage of the mining revenue. In this way, Bitcoin Minetrix aims to make cloud mining available to everyone. Tokens can also be placed on a smart contract for high annualized yield (APY).

This new cryptocurrency is showing a strong start to the presale. Bitcoin Minetrix has raised more than 450 thousand dollars in a week.

The presale consists of ten rounds, in each of which 280 million tokens will be offered. In total, the presale will offer 70% of the total of 4 billion tokens. 

During the first round, the price of $BTCMTX is only $0.011 per token. In subsequent rounds, the price will increase and eventually reach the $0.0119 level.

By the end of the pre-sale, Bitcoin Minetrix expects to have raised $32 million. Investors can purchase $BTCMTX with other cryptocurrencies such as Ethereum (ETH) or Tether (USDT).

How Much Should You Invest in Bitcoin? What the Experts Say

While third-party advice should be taken with a grain of salt, it’s useful to evaluate what industry experts suggest when it comes to betting on Bitcoin. 

A general rule of thumb is that investors should never allocate more than 5% of their total portfolio to Bitcoin and cryptocurrency in general. 

This is because bitcoin is considered a high-risk asset, so the portfolio should be balanced by other, more reliable asset classes.

These typically include bonds and stocks, as well as index funds and possibly gold and real estate. 

• However, some argue that a higher proportion of assets is appropriate. 
• For example, Alex Doll, president of Anfield Wealth Management in Cleveland, argues that no more than 10% should be allocated to high-risk assets such as bitcoin. 

Anjali Jariwala, a certified financial planner at FIT Advisors, is more cautious in this regard. Jariwala notes that she suggests limiting cryptocurrency investments to 3% of your total portfolio. 

However, there is no universal answer to the question of how much to invest in Bitcoin. As we have shown in detail before, it all comes down to personal risk tolerance, long-term financial goals, and how much volatility investors are comfortable with. 

Furthermore, the most important conclusion is that investors should only consider using discretionary income when buying bitcoins and cryptocurrencies. This means that you should only invest after you have covered your basic expenses.

Conclusion

Finding the so-called “golden mean” when evaluating how much to invest in Bitcoin is the most important task to accomplish before risking money. Beginners, in particular, should pay attention to proven risk management strategies such as dollar cost averaging, budget planning, and diversification.  

As for diversification, cryptocurrency pre-sales are popular with investors who want to learn how to get into cryptocurrency at first. 

They can be riskier than investing in bitcoin, but offer a better chance of growth in the short term, especially since BTC is seen more as a store of value.

Bitcoin ETF Token is a new cryptocurrency presale that has raised over $65,000 in just two days. This cryptocurrency speculates on the emergence of a new Bitcoin ETF and offers a reward on the stake. 

Over time, $BTCETF will eventually burn through 25% of its token stock, and its price in the presale is only $0.005.

FAQ

How many bitcoins has Elon Musk acquired?

In terms of his investments, the number of bitcoins that Elon Musk currently owns has not been disclosed. However, it is known that Tesla, of which Elon Musk is the CEO, has invested more than $1.5 billion in Bitcoin to better utilize free cash flow.

Although Tesla has since sold most of its bitcoin holdings, it noted in its latest earnings report that it still owns $218 million worth of bitcoins. 

How much bitcoin should beginners buy?

While there is nothing wrong with investing in Bitcoin as a beginner, novice investors should exercise caution. Think about how much spare cash is available at the end of each month, and perhaps consider a strategy of dollar cost averaging.

This should be done in addition to building a diversified portfolio that includes other cryptocurrencies. Ultimately, beginners should realize that they could lose some or even all of their Bitcoin investment. 

Is it worth investing $100 in bitcoin?

Only a few dollars can be invested in Bitcoin, so no amount is too small in this regard. The most important thing to consider is that the amount of bitcoin investment should be determined based on the income an investor has, their risk tolerance, budget, and long-term financial goals.

Some investors consider investing $100 monthly in bitcoin using a dollar cost-averaging strategy. This way of buying bitcoin is arguably riskier than a lump sum investment.