How much Bitcoin should I buy and how long should I hold for?
We answer two of the most important questions when it comes to investing in Bitcoin.
The stock market is a device for transferring money from the impatient to the patient."”
Getting started
The stock market has proven Buffett correct time and time again. Investing in Bitcoin is no different. Those with the best returns are the ones who have been able to sit on their hands.
You need a plan and the patience to stick to it. Here's how to get started.
Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
Decide on your risk tolerance
Bitcoin is an extremely volatile asset. Prices have been known to swing by up to 20% in a single day. As a result, Bitcoin should be placed firmly within the "high-risk" section of any investment portfolio.
A common piece of advice with Bitcoin and cryptocurrencies is to "only invest what you can afford to lose". This is because the industry is still relatively new and no one quite knows how it will all pan out.
Once you understand this as a possibility, you can start to think of a figure that would be alright to risk. Would losing $1,000 hurt? What about $10,000? This number is different for everyone, but each investor will know the limit to what they can take, both emotionally and financially.
Look at the experts
Bitcoin has been around long enough that it is now part of many hedge fund portfolios. A recent survey of 100 hedge fund managers found that 98% planned to invest at least 1% into cryptocurrencies including Bitcoin. Of those fund managers investing in Bitcoin, the average portfolio allocation was around 7%, with 1 in 6 planning to allocate 10% or more.
Renowned billionaire and fund manager Paul Tudor Jones has set a target allocation of 5% Bitcoin for his firm's portfolio. Whether you follow this approach is up to you, but the 5–10% target provides a good benchmark to work from.
Invest as much or as little as you want
How much Bitcoin you buy is completely up to you. It can be fractionalised, which means you don't need to buy or sell a whole coin each time. This means you can spend as little as a few dollars. As a result, Bitcoin investments are extremely flexible.
Various brokers each have a different minimum spend. For instance, with the Finder app you can get started with as little as $5.
Exit strategy
Finally, while it's important to think about risk, it is just as important to think about profits. What happens if you quadruple your investment? Champagne all round? Only if you have an exit strategy in place. Think about your investment goals and use that to set some price points you would be happy cashing out at.
For example: If Bitcoin reaches $200,000 I'm going to sell 60% of my holdings to make a deposit on a house. If it reaches $300,000 I will sell the remaining 40% and retire early.
Putting it all together
Buying Bitcoin is best if you are investing for the long term. Only invest what you can afford to lose. Look for guidance from experts and have an exit plan ready if things go well.
With 30+ platforms available to buy Bitcoin from in Australia, it can be overwhelming to choose. Our experts have compared exchanges so you don't have to.
Only supports AUD deposits from an Australian bank account
High spreads
CoinSpot is one of the more popular Australian cryptocurrency exchanges, particularly for beginners. With CoinSpot you can deposit fiat currency (AUD) and make a purchase within minutes. There's no need to stress about currency conversion, market making or order limits.
Deposit Methods
Bank transfer Credit card Cryptocurrency Debit card PayID
Deposit Fees
Bank transfer and PayID: None Cash: 2.5% Card: 1.88%
Transparent fee structures and 0.6% trading fee also comes with a discount for high-volume traders
Hybrid exchange with advanced features
Demo account for beginner traders to practice trading
Does not offer an order book for variable pricing
Platform may be confusing for beginners
Can only be used by Australian, NZ and UK residents
Swyftx is the ideal exchange for buying Bitcoin with AUD due to its integration with Osko bank transfers and low fees. Users can send money to their Swyftx account instantly using bank transfer and POLi pay methods.
Deposit Methods
Bank transfer Credit card Cryptocurrency Debit card PayID
Deposit Fees
Bank transfer: $0 Card: Fees vary PayID: $0 Cryptocurrency: $0
Low fees including discounts for users that pay their fees with BNB
Global reputation
Complex for beginners
Large amounts of money deposited on platform may risk exploitation
Binance is the most popular cryptocurrency exchange on the market based on trading volume. It has one of the best reputations in the industry and is available in a wide number of countries. Binance offers some of the lowest trading fees out there, with users able to purchase Bitcoin with fees as low as 0–0.1%. Binance is suitable for both beginners and experienced traders. So if you find yourself wanting to explore cryptocurrencies further, Binance will accommodate most of your needs.
Get access to multiple markets like global stocks and cryptocurrency
Simple user design
Complex fee structure
Small range of cryptocurrencies
High minimum deposit of US$50 and order of US$25
eToro has been around for over a decade now, originally starting as an online exchange for shares and commodities. Since then, it has branched out into cryptocurrency while retaining its focus on trading. eToro has ample support for traders, including advanced buy and sell features. The feature that separates eToro from the rest when it comes to trading is its social elements. eToro's platform is filled with like-minded investors, where you can discuss trades and share news about crypto events. You can even see what trades other top investors make and copy them.
Deposit Methods
Bank transfer Credit card Debit card PayPal eToro Money
Deposit Fees
Fees vary (up to a 3% currency conversion fee for AUD)
Withdrawal Fees
AU$5 (min. of US$30) Up to a 3% currency conversion fee for AUD
Trading Fees
1%
How we choose these services
These are our top picks but this isn't a complete comparison of every available exchange – so our favourites may not be the best choice for you. Read our full methodology here to see how we decide on our top picks.
Compare cryptocurrency exchanges
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Disclaimer:
This information should not be interpreted as an endorsement of cryptocurrency or any specific provider,
service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and
involve significant risks – they are highly volatile and sensitive to secondary activity. Performance
is unpredictable and past performance is no guarantee of future performance. Consider your own
circumstances, and obtain your own advice, before relying on this information. You should also verify
the nature of any product or service (including its legal status and relevant regulatory requirements)
and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.
James Edwards was the cryptocurrency editor at Finder. He led the editorial strategy and reported on the latest industry news to further Finder's mission of helping people make better financial decisions.
A relatively early adopter, James has been using Bitcoin since 2013 and began working in the industry in 2017. He takes pride in his ability to boil down complex topics into language his parents can understand.
His expertise has seen him called on to report at events such as TechCrunch Disrupt, CoinDesk Consensus and IBM Think, and he has coordinated a vast number of high-profile interviews with the industry's brightest minds.
He is a regular contributor to Nasdaq and is frequently called upon for market commentary in Australia and abroad. See full bio
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