Bitcoin’s value loss misplaced a market worth of $ 90 billion. What’s to be thought-about
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However, Bitcoin has been in a downward spiral since April when it hit an all-time high of nearly $ 65,000. Since then, the cryptocurrency has fallen more than 50% and has wiped out almost all of its gains since the start of the year.
Extreme and sometimes unpredictable up and down movements are relatively common in cryptocurrencies and are likely to continue.
“The only thing I can safely expect is volatility,” said David Yermack, professor of finance at New York University’s Stern School of Business. “From day one, this has been a risky investment for people.”
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Bitcoin has seen both astronomical growth and large sell-offs at various times in between over the past decade. Although many bulls point to past performance as a sign that the cryptocurrency will continue to rise in the future, it may not happen, according to Yermack.
“It’s a purely speculative asset,” he said.
Only invest what you are willing to lose
Financial experts generally advise that people looking to invest in Bitcoin only allocate a small portion of their portfolio due to its volatility.
“People should only really invest what they are willing to lose,” said Daniel Polotsky, CEO of CoinFlip, one of the largest Bitcoin ATM companies in the US
He added that people nearing retirement who need the money in the short term, or who want to trade frequently to make a profit, may want to reconsider bitcoin as an asset for such goals.
“Maybe there are more ways to make money because it’s so volatile, but trading back and forth can be very addicting,” he said. “And most of the people who do that lose money.”
People should only invest what they are willing to lose.
When allocating part of your portfolio to a speculative asset like Bitcoin, you should be disciplined and establish rules for buying and selling it, said David Sacco, an economics professor at the University of New Haven.
“You can gain experience and not blow yourself up,” he said.
Buy long term
Surely there are plenty of cops out there who see Bitcoin explode in value in the future as adoption continues.
For those determined to hold onto Bitcoin for the long term, a sell-off after hitting a record high isn’t a huge issue and even offers an opportunity to buy more cryptocurrency at a discount.
Those looking to invest in Bitcoin should assess where they stand with other personal finances and investment goals to determine if they have some extra cash for a risky asset.
If you do, it’s okay to put some money in bitcoin and buy it on a day it’s down, said Anjali Jariwala, certified financial planner, CPA, and founder of Fit Advisors in Torrance, California.
“Throw in some money and let it stay in for a while and flavor,” she said. “Just so you don’t have to make decisions every time there are price fluctuations, which currently happens every few days.”
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