Bitcoin (BTC), the largest cryptocurrency by market capitalization, has had a few rough months after setting its all-time high on April 14. This poor performance comes after Elon Musk announced that Tesla had stopped accepting the cryptocurrency and China’s ban on BTC mining. While these factors introduced the current sentiment in the BTC market, the coin’s inherent volatility has also played a significant role in some of its biggest routs in recent months.
Yesterday, BTC lost approximately 5% of its value and slid below the $30,000 level for the first time this month. The digital asset traded as low as $29,360.96 before closing the day’s trading at $29,807.35. As a result of this slump, the coin shed more than $90 billion from its market cap. Although BTC has since recovered its losses, this massive loss demonstrates just how risky Bitcoin investments are.
This article collates the opinions of several experts, who shed light on the current performance of BTC and whether you should consider adding it to the list of the best investments for retirement.
BTC is volatile and speculative; Only invest what you can afford to lose
According to David Yermack, a professor of finance at New York University Stern School of Business, volatility has made BTC a risky investment since its birth. On top of this, he believes that BTC is a purely speculative asset. While he acknowledges the price milestones BTC has achieved, Yermack also points out that the coin has experienced massive crashes in its growth. He added that in as much as BTC bulls claim the coin’s astronomical growth over the past decade is indicative of further gains, increased volatility and speculation might prevent this.
Daniel Polotsky, the CEO of CoinFlip, a leading Bitcoin ATM company, advises that it would be wise to invest what you are willing to lose. Per Daniel, BTC is not an ideal investment for people that are nearing retirement or people that need their invested money quickly. He added that BTC is also not the go-to asset for traders. Although he believes the cryptocurrency’s volatility might offer easy money-making opportunities, he cautions that traders must exercise caution to prevent an addiction to trading back and forth. According to him, most people that trade BTC back and forth often lose their money.
David Sacco, an economics professor at the University of New Haven, believes you should take a disciplined approach while dealing with BTC. By setting buying and selling rules, Sacco claims you can get experience while staying safe.
Anjali Jariwala, a certified financial planner, and the founder of Fit Advisors, believes a long-term investment in BTC might pay off. She views a sell-off as a good point to enter the BTC market. However, Jariwala cautions that you must first assess whether you have extra to invest in BTC before proceeding. She advises throwing some money into the cryptocurrency and allowing it to sit for a while. According to her, this will prevent you from jumping every time the price fluctuates.