Is it a Good Idea to Invest in Cryptocurrency?
Cryptocurrency is a highly volatile and dangerous investment. Investing in the stocks of existing firms is often safer than investing in cryptocurrencies such as Bitcoin. We’ll talk about whether you should buy cryptocurrencies or not.
Investors who are concerned about the stock market may want to consider Bitcoin News or other alternative assets. When thinking about cryptocurrency, keep in mind your overall portfolio goals as well as your risk tolerance. Learn how to invest in Bitcoin rather than equities to assess if adding the cryptocurrency to your portfolio is the right move for you.
Bitcoin Risks vs. Stocks
Before deciding whether or not to buy cryptocurrency, it’s crucial to understand the hazards. Investing implies a certain amount of risk. The stock market could tumble for a multitude of reasons. Corporations are capable of going bankrupt. In a more positive sense, a stock’s value may increase over time.
“With an individual stock, there are dangers,” Kirk Chisholm, a wealth manager and alternative investment specialist at Innovative Advisory Group, told The Balance over the phone. He did point out, however, that these are risks that many investors confront. Stocks are unusual in that there is some direction for predicting where a price will go.
David Stein Point of View
According to David Stein, a former chief financial strategist, and portfolio manager for an investment fund, bitcoin does not have the same predictions as stocks.
“Cryptocurrency is completely speculative and based on supply and demand,” Stein explained. Bitcoin is a relatively new development, according to both Chisholm and Stein, that has yet to achieve popular adoption.
Bitcoin’s History compared. Stocks’ History
It is useful to examine how different investments have done over time.
In 2015, the price of Bitcoin ranged from $200 to $500 per coin. However, in 2017, the price suddenly rose to a high of $19,891 in December before plunging to below $3,500 in December 2018.
The stock rise has been less dramatic since 2015, but it has been more constant. The S& P 500 index was hovering around $2,000 per share in early 2015. The S& P 500 is currently trading at around $3,100 in July 2020, despite ups and downs since then.
The Dow Jones Industrial Average (DJIA) was trading between $17,000 and $18,000 in early 2015. The DJIA was around $24,000 when Bitcoin hit nearly $20,000 in December 2017.
According to Chisholm, bitcoin has been volatile since its creation because there was no natural mechanism to value it. “The price was increased to $20,000 because everyone had heard the news and no one wanted to be left out.” Then it dropped to $3,000, and now it’s about $10,000.”
Who Makes a Good Bitcoin Companion?
Bitcoin could be a good choice for you if you’re seeking a little more variety in your portfolio. Bitcoin and other cryptocurrencies are a viable alternative to traditional investments. It will assist you in determining if you should buy cryptocurrency or not. Blockchain is another most trending way to buy, sell and trade like crypto.
“Bitcoin is useful if you want assets that aren’t denominated in your local currency or the dollar,” Stein explained. The author explains, “It’s a technique to protect some assets away from the currency.”
Even if you think Bitcoin would be a good fit for your portfolio, Stein and Chisholm agree that it shouldn’t be your primary investment goal. It all comes down to how much danger you’re willing to take and how well you can handle it.
It all comes down to how much risk you’re willing to take and how much money you’re willing to lose in your portfolio.
“Think that (Bitcoin) might go to zero or go up twentyfold if you enjoy math and calculus,” Chisholm remarked. “How much of your portfolio are you willing to part with?” I recommend keeping it at 1 to 5% of your portfolio, depending on your risk tolerance.”