According to Medium.com, more than 547,000 Bitcoin wallets are actively in use right now, with some 730,000 transactions being completed across the network every day.

While there was much scepticism about this form of cryptocurrency when it first came out, it is increasingly being regarded by investors as being a valuable addition to their portfolio.

There’s no doubt that Bitcoin offers unique opportunities for those who want to grow wealth. But if you are not familiar with this form of digital currency, then you may not be aware of the best way to start dabbling in it.

That’s why we’ve put together this guide of investing strategies for the world's first and most popular cryptocurrency. Hopefully, you’ll find it a useful resource in your attempt to increase your assets.

What is Bitcoin?

Bitcoin is a decentralised digital currency that was launched in 2009 by an anonymous individual or group under the pseudonym of Satoshi Nakamoto.

Unlike traditional currencies, it exists solely in digital form. It is powered by blockchain technology, which is a transparent and secure ledger that records all transactions across a distributed network via complicated and intricate cryptography that maintains the integrity of the network.

The appeal of Bitcoin to many investors is that it allows for secure, transparent, and fast peer-to-peer transactions that are not controlled by a government or bank.

One of Bitcoin’s most notable features is that it is a deflationary asset because it has a limited supply of only 21 million individual coins.

Due to the scarcity of bitcoins and because they can be easily sent and received anywhere in the world, this form of crypto has developed significant value.

New investors can buy it on several digital currency exchanges, including the Australian bitcoin exchange, with the goal of keeping it as a long-term investor or a form of tender -  which many businesses now accept.

Why Invest in Bitcoin?

There are several reasons why you might invest in Bitcoin to either complement other strategies for wealth generation or as an alternative to them.

One of the main ones is that it provides a hedge against inflation. As mentioned, there will only ever be 21 million Bitcoins that can be mined. Therefore, unlike paper money, which is often printed by governments to stimulate economies, the value of this form of crypto won’t be affected by the production of more units.

As Bitcoin operates on a decentralized blockchain, it is free from the control of any government or institution. This not only makes it a truly global currency but also an attractive investment for those who value financial independence.

What is the value of Bitcoin?

Since its launch in 2009, Bitcoin has enjoyed significant growth, albeit in a highly volatile way, which has often seen it crash and bounce back.

When it first began trading, it had a value of less than a cent. However, this has spectacularly increased overall to around $66,000 per coin as of mid-April 2024.

Proven Strategies for Investing in Bitcoin

All investment comes with risk, and Bitcoin is no different.

However, if you are interested in speculating on this form of cryptocurrency, here is an overview of some proven strategies you can adopt.

1. Dollar-cost Averaging (DCA)

Dollar-cost averaging is a popular strategy for investing in the stock market, but it can also work well for Bitcoin.

Essentially, it involves investing a fixed amount of money into the crypto, for example, $100 a week or month, regardless of the price and market conditions and works on the principle that the average dollar cost you incur will average out over all the short-term market highs or lows.

While they might not be able to maximise their returns when the market rises rapidly, many investors prefer this method because it reduces the risks of making emotional decisions and avoids the stress of trying to time the market.

2. Buy and Hold

This method is also known as HODLing and refers to the act of buying Bitcoin and holding onto it for an extended period - regardless of whether there are short-term market fluctuations.

People who adopt this strategy believe that Bitcoin’s value will continue to rise significantly over time as more people try to invest in it.

The great thing about this method is that it can be a very good long-term strategy for wealth generation, although it does require patience and a particularly strong conviction during downturns.

3. Bitcoin ETFs and Funds

If managing a crypto wallet or navigating exchanges pushes you a bit too far out of your investing comfort zone, consider accruing Bitcoin indirectly through exchange-traded funds (ETFs) or trusts.

While you will incur management fees if you do this and you won't own the asset directly, the investment will be much easier to manage because there is no requirement for private keys or wallets.

4. Active Trading

As you become more experienced in and understand Bitcoin trading, you might want to engage in active trading. This involves buying and selling Bitcoin to profit from short-term price movements.

You can choose to do day trading, where typically you will hold positions for a few hours, or swing trading, where you do so for a few days or weeks.

These methods can potentially generate very high and quick profits if you play the market just right. However, it can also be very time-intensive, incur high transaction fees, come with significant risk, and require a deep technical understanding of market trends.