Stories of Bitcoin millionaires flooded 2017. Which made seemingly everyone ask, “Should I invest in Bitcoin?” No one wanted to miss out on what seemed to be “easy money.”
Of course, investors found out that Bitcoin was not “easy money.” The value of Bitcoins tanked, losing a third of its value in just twenty-four hours alone. Many investors lost significant amounts of money in just a few months, according to the crypto trading bot.
But the value of Bitcoin has been down for a while, long enough to revive thoughts of investing in the cryptocurrency once again. Many are asking, “Should I invest in Bitcoin now?”
Let me go ahead and get my final answer out of the way—for most, no. Let me explain:
- Cryptocurrency is still the Wild West. In 2017, the cryptocurrency market had very little regulations, leaving investors susceptible to fraud. Many investors did not really understand cryptocurrency, and, therefore, were taken advantage of. In 2019, there are more investor protections in place, but still not enough for the average Joe who might not understand exactly what he is doing. As I write this, the SEC (U.S. Security and Exchange Commission) is reviewing a Bitcoin ETF (exchange traded fund), which, if approved, may provide the better route for those really wanting to invest in Bitcoin.
- Carving out a large percentage of your investment portfolio with any single investment is never wise. Even if that ETF mentioned above is approved, diversification still applies. A single investment, whether it is Bitcoin or any other investment, should not take up a chunk of your portfolio. Such a move leaves you very vulnerable. Diversify, diversify, and diversify.
- Bitcoin is not your magic bullet. Over the long-haul, placing your hope in any individual investment will likely not turn out how you desire. Your magic bullet is not a single investment, but consistently investing in a diversified portfolio. This is not nearly as exciting, but the strategy gives you a much better shot at hitting your investment goals.
If you still want to invest in Bitcoin, here is my suggestion—only invest money that you are comfortable losing. Treat Bitcoin as a speculative (high risk) investment. There is likely a place for cryptocurrency in the future. But you should not bet your retirement on it alone.