Bitcoin, a cryptocurrency (virtual) currency, has been on the roller coaster market for several days, giving a good reason to be extremely cautious in investment, US economic media CNBC reported on the 23rd (local time).
According to data from Coin Metrics, Bitcoin soared to an all-time high on the 21st, reaching 58,000 dollars. But the day before, 50,000 dollars collapsed and pushed to 48,000 dollars.
Elon Musk, Tesla CEO, said on the 20th that “the price of bitcoin, which has exceeded $1 trillion in market price, is too high”, and finance minister Janet Yellen warned on the 22nd that bitcoin is an “extremely inefficient transaction method” Year caused a plunge in the price of Bitcoin.
However, as of 1:50 pm (Korean time) on this day, bitcoin has rebounded slightly, representing $5,722.102 again.
Bitcoin’s extreme up-and-down movement is relatively common and is expected to continue. Therefore, it is necessary to invest in the long term with a small amount of extra money.
â—‡ Volatility is’certain’ and profitability is’uncertain ‘: David Yemack, professor of finance at New York University (NYC) Stern School of Business, said, “The only thing to be sure is volatility,” and “a risky investment from the start.”
Bitcoin has seen astronomical growth over the past decade. In the meantime, at various points in time, massive sell-offs occurred.
Professor Yemek said many optimists say the past is a sign of a sustained surge, but there is a possibility that this will not happen.
“Bitcoin is a purely speculative asset,” he added. “It has grown in popularity but is still not considered a mainstream investment.”
â—‡ Invest just enough to be okay to lose everything: Financial experts generally advise investors in bitcoin that they should allocate only a small amount from their portfolio. The British Financial Supervisory Service issued a similar warning.
“You have to invest in small amounts enough to be okay with losing money,” said Daniel Polotsky, CEO of Coinflip, the largest Bitcoin ATM company in the United States.
He added that people who are about to retire in the near future, who are in an urgent need of cash, or who often trade for profits may want Bitcoin as a means of achieving their goals.
“I don’t know if high volatility means high revenue opportunities, but frequent transactions are addictive,” said CEO Polotsky. “Most people who do that lose money.”
“If you want to allocate part of your portfolio to speculative assets like bitcoin, you have to trade with rules,” said David Saco, professor of economics at New Haven University. “That’s how you gain experience and don’t self-destruct.”
â—‡ Invest in the long term instead of frequent transactions: There are many optimists who believe that the value of bitcoin will increase explosively as the adoption of bitcoin continues in the financial sector.
For investors who decide to hold bitcoin for a long time, the plunge after hitting an all-time high is not a big concern. Their assets have increased by about 80% so far this year.
Those who want to invest in bitcoin need to know exactly where they are, with their financial position and investment goals, and determine if they have enough money to put in bitcoin.
“Then it’s okay to put a little bit of money in bitcoin and buy more on the downside,” said Anjali Zirwala, CPA, founder of Fit Advisors.
He added, “Invest a little bit of money and take a look at it for a while,” he added. “Don’t trade every few days when prices change suddenly.”
