How Much Bitcoin Should I Buy? (Beginner’s Guide)

Bitcoin recently surpassed the $100,000 milestone for the first time in December 2024. This surge has left many investors wondering: How much Bitcoin should I buy?

The answer depends on your financial goals, risk tolerance, and long-term strategy. This guide will walk you through key considerations to help you make a decision. 

How much Bitcoin should I buy as a beginner? 

If you’re new to Bitcoin, you should start small. Investing a manageable amount can help you slowly build your holdings while minimizing potential risks. 

Guidelines for Beginners:

• Invest only what you can afford to lose: Bitcoin’s price can be volatile, and its value may swing dramatically in the short term. It’s important not to invest money that you may need for the essentials—like healthcare and housing. 
• Diversify your portfolio: Financial advisors often recommend allocating no more than 5-10% of your portfolio to volatile assets like Bitcoin. You should also consider investing in ‘safer’ assets like the S&P 500 and other index funds. 
• Consider dollar-cost averaging (DCA): Consistently buying small amounts can be a great strategy. For example, setting up a recurring weekly buy of BTC on a platform like Swan Bitcoin or Robinhood means that you’ll slowly build up your holdings over time. 

Key Takeaway: A $100 initial investment can be a great starting point for beginners. Over time, consistent small investments can add up.

Is investing $100 in Bitcoin really worth it? 

While a $100 investment in Bitcoin might seem too small to make a difference, here’s why it’s recommended for beginners: 

• Historical growth. In 2013, $100 in Bitcoin could buy over 10 BTC. Today, those coins would be worth over $1 million. While it’s unlikely that you’ll see the returns of early Bitcoin investors, it’s a reminder that a small investment can make a big impact. 
• Potential growth. Imagine Bitcoin grows by 200% over the next five years. $100 could turn into $300. This is a fantastic return on any investment! 
• Confidence building. Starting with $100 helps you understand the mechanics of crypto investing and helps you build confidence in the world of crypto—buying, storing, and tracking your assets. 
• Dollar cost averaging: Slowly building up your Bitcoin holdings over time with small, recurring purchases can be a great way to acquire a large amount of BTC over time. 

While a $100 investment won’t make you a millionaire, it’s a low-risk way to start your crypto journey.

Is Bitcoin a good investment? 

Bitcoin’s appeal lies in its historical performance and potential for future growth. Let’s walk through a few reasons why investors choose BTC: 

• Digital gold. Bitcoin is often compared to gold as a store of value. Bitcoin has a limited supply of 21 million units — which means that it can potentially serve as a hedge against inflation and economic uncertainty. 
• Institutional adoption. In recent years, Bitcoin has seen increased adoption from institutions and even governments. In 2024, Bitcoin ETFs became available in the US for the first time, and Donald Trump promised that the United States would hold a strategic Bitcoin reserve. 
• Consistent growth: While Bitcoin is a volatile asset, it has shown consistent price growth over time. It’s likely that this growth will continue as digital-native young investors come of age. 

Historical Note: Despite volatility, Bitcoin has delivered an annualized return of  over 200% since its creation. 

Questions to consider before investing in Bitcoin 

What’s my goal in investing in Bitcoin?
Ask yourself why you’re interested in Bitcoin. Are you looking to grow your money over time, or are you trying to make a short-term profit? Clarifying your investment goals will help you make better investment decisions. 

What is my time horizon?
Consider how long you’re willing to invest in Bitcoin before needing access to your funds. If you need the money soon, Bitcoin may not be the best option due to its volatility. If you’re planning to hold for several years, you can potentially ride out the ups and downs.

What’s my current financial situation?
Look at your overall financial situation. Do you have emergency savings and no high-interest debt? If you’re financially stable and can afford to take on some risk, investing in Bitcoin could be a good idea. Avoid investing more than you’re willing to lose.

Do I understand Bitcoin and its market dynamics?
Bitcoin can be complex, so take time to learn about how it works. Read up on topics like blockchain technology, consensus mechanisms, and Bitcoin storage. YouTube channels like Crypto Casey and Digital Asset News are great resources for beginners! 

What tax implications might this investment have?
Selling and trading away Bitcoin is subject to capital gains tax. To keep track of your tax obligations use crypto tax software like CoinLedger. 

What are the best platforms to buy Bitcoin as a beginner? 

Here’s a few beginner-friendly crypto platforms to help you get started on your Bitcoin journey. 

Coinbase

Coinbase is a popular platform for crypto beginners. Coinbase is easy-to-use and offers free crypto through sign-up bonuses and Learn and Earn — a program where you earn crypto for completing short modules! 

Pros 

• Beginner-friendly 
• 260+ cryptocurrencies available 
• Safe, regulated, and secure! 

Cons

• Higher fees than other platforms (up to 0.60%, can be higher based on market conditions and other factors)
• Slow customer support 

Swan Bitcoin

Swan Bitcoin is a platform focused on slow and steady accumulation of Bitcoin. You can set up recurring buys and dollar-cost average your BTC buys over time. 

Pros 

• Beginner-friendly 
• High security (multi-signature vault custody) 
• Built for long-term accumulators, IRAs available 

Cons

• Higher fees than other platforms (0.99%) 
• BItcoin only

Cash App

Cash App is a popular payments app that allows users to easily buy and sell Bitcoin. Buying BTC on Cash App just takes a few clicks! 

Pros 

• Convenient for existing Cash App users 
• Buy Bitcoin in only a few clicks! 
• Automatically convert direct deposits to BTC! 

Cons

• Bitcoin only! 
• Lacks advanced crypto features 
• High fees (0.75-3%) 

Robinhood

Robinhood is an investing app that supports stocks and cryptocurrencies. Robinhood has an easy-to-use mobile app, making it a great choice for beginners! 

Pros 

• Zero fees on crypto purchases 
• Easy to use 
• Stocks, cryptocurrencies, and options trading supported! 

Cons

• Only 19 cryptocurrencies available
• Lacks advanced features for cryptocurrency 

What other tools do I need as a beginner Bitcoin investor?

Let’s walk through some convenient tools that you may need as a beginner Bitcoin investor. 

Software wallet: A software wallet is a great choice to securely store your cryptocurrency. While you may lose access to your BTC in the case that your exchange gets hacked or goes bankrupt, software wallets protect against these risks. 

Hardware wallet (optional but recommended): A hardware wallet provides an additional layer of security by storing your private keys offline. While hardware wallets like Ledger and Trezor cost money, they’re a great option if you’re planning to hold your BTC for the long-term. 

Portfolio tracker/tax reporting: A crypto portfolio tracker/tax reporting tool like CoinLedger can help you keep track of your gains and losses and help you generate complete crypto tax forms. 

Why Is Bitcoin Rallying?

Let’s walk through a few factors driving up the price of Bitcoin. 

• Political tailwinds. Donald Trump’s 2024 re-election campaign included promises to make the U.S. a Bitcoin superpower, boosting investor sentiment.
• Halving cycles. Bitcoin halvings happen every 4 years, reducing the mining reward for BTC. Bitcoin halvings often lead to price rallies, due to the reduction of supply and the increased media attention on the crypto ecosystem. The last halving happened in April 2024. 
• Pro-crypto leadership. After his re-election, Trump signalled that he would nominate Paul Atkins for SEC chair. Atkins is considered pro-crypto, signaling crypto-friendly regulatory changes that could boost the market. 

What Are the Risks of Buying Bitcoin?

It’s important to remember that Bitcoin, like any other investment, comes with risks. Here are a few risks to keep in mind: 

• Volatility. Bitcoin’s price can drop significantly in a matter of days. For example, the price of BTC fell from $69,000 to $33,000 in 2021. If you’re planning to invest in BTC, you should be prepared for volatility. 
• Security risks. Without proper storage, your assets may be vulnerable to hacks. It’s recommended that you invest in a cold storage wallet like Ledger for maximum security. 
• Backing: Some critics claim that unlike the US dollar, cryptocurrency is ‘backed by nothing’. However, supporters claim that Bitcoin’s limited supply and other intrinsic properties give it value. 

How much Bitcoin should I buy to become a millionaire? 

It’s important to remember that it’s impossible to predict the price of Bitcoin in the future. While some optimistic forecasters claim that Bitcoin will reach $1 million per coin, the price of cryptocurrencies are determined by a complex mix of supply and demand.

In the optimistic scenario that Bitcoin reaches $1 million per coin, owning 1 BTC today could make you a millionaire.

Let’s take a look at how much smaller amounts could yield in this scenario: 

• 0.1 BTC (~$10,300) could yield $100,000.
• 0.01 BTC (~$1,030) could grow to $10,000.

Long-Term Strategies:

• Focus on steady accumulation rather than speculative, high-risk bets.
• Reinvest profits strategically and diversify your portfolio.
• Do not panic sell and recognize that volatility is natural. 

Conclusion

Bitcoin offers a unique opportunity to participate in the future of finance, but success depends on careful planning and informed decision-making.

• Start small and use beginner-friendly platforms like Coinbase or Swan Bitcoin.
• Remember that Bitcoin should be part of a diversified portfolio.
• Stay informed about market trends, economic conditions, and regulatory changes.

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