Investing in Bitcoin? Tread Carefully!
Bitcoin At New Heights
Bitcoin has been around for years. I kick myself in the foot for not buying at least one coin back when I could actually afford one. I initially heard about bitcoin about 5 years ago in college when one of my friends told me about mining bitcoin. That's another story for another day. Anyways, I wish I had bought one just for fun because I remember a time when Bitcoin was worth around $140. I knew a guy that had ten of them when it hit over $200 and I was trying to convince him to sell. I'm sure he is glad that he didn't heed my advice.
So Bitcoin just hit around $18000 the other day. If you invested in it when it hit that high, then you probably feel stupid about right now because it has taken about a 4% drop over the past couple of days. The big question is: Will it go back up and continue to rise?
Sadly, just like any investment there is no single person in this world - not even Warren Buffet himself can answer that question. You can't predict whether the market will go up, down or even sideways. My guess is that Bitcoin has peaked. I mean once you've heard about it in the Wall Street Journal it's already too late.
I will say this. Smart investors are going to shy away from Bitcoin for now. People are cashing in. I would've cashed in a long time ago. Heck, if I had one bitcoin I would cash it in! I could use an extra $16,700. If you have any Bitcoin you need to sell! Do it now!
Don't Put All of Your Eggs In One Basket
It's an old saying and any investor will tell you to have a very diverse portfolio. I'm not saying that shouldn't include cryptocurrencies! Many investors are investing in cryptocurrencies other than just Bitcoin right now. Maxcoin, Influxcoin, Dubaicoin, and many more have seen huge returns.
In a new digital world, many investors are seeking investments in different areas than just real-estate and the stock market. Cryptocurrencies are now being seen as a smart investment category. They're all over the Wall Street Journal.
Always Keep Your Portfolio Strong
Be mindful, cryptocurrencies might just be a fad, after all. Only in the past year have most cryptocurrencies shot up to the high numbers that they are at now. Real-estate and the stock market have remained fairly constant for nearly a decade.
A good portfolio should consist of many different stocks, real-estate investments and cryptocurrencies. If you should invest in cryptocurrencies, buy into many different ones. The same goes for stocks. Don't fall for lies like "Apple stock always rises." Most investors are predicting that Apple stock will soon fall. Also, don't invest in penny stocks or cryptocurrencies that aren't well known. Follow in the footsteps of smart investors. Remember, you will likely have to stick with an investment for years to see it grow. Rome wasn't built in a day. It took high school student Erik Finman 6 years to become a millionaire off of bitcoin. He invested in it in 2011 at a mere $12 a coin. Now the kid is sitting on millions.
The Risky Part
One of the main issues with cryptocurrencies is that sometimes they get hacked. Just look at Youbit. 17% of their holdings were stolen, causing the whole exchange to fold. Many people lost their investments due to this disaster.
Anything in this world comes with a risk. That's why seasoned investors have very diverse portfolios. Though unlikely, government regulations could cause cryptocurrencies to fold altogether. You can't invest without taking a risk. Everyone has a choice. You can earn 1% a year in a savings account or you can choose gamble it by investing.
Lastly, many cryptocurrency exchanges are experiencing crazy delays right now. It can take up to 10 days to get your investment in or out. This can mean that if you want to sell right now, the price may change when the exchange is actually made. This has proved hectic for investors wishing to pull out right now when bitcoin is at an all-time high. Imagine wanting to sell today but having to wait 10 days when the price has dropped $2000 per coin. That could be catastrophic and could ruin the profitability of the whole investment. With stocks, the trade occurs the same day.