Volatility is inevitable, regardless of what investment mechanism you choose. Bitcoin has seen its fair share of dips and highs, and yet, so has the stockmarket as a whole – let’s not forget the GFC, or the Great Depression.
A fraught stock isn’t always a bad thing. A market without any volatility is considered stale, boring and without worthwhile profit.
Does this mean one should abandon their traditional stocks – such as bonds, traditional currencies and natural resources – and run gladly into the open embrace of cryptos such as Bitcoin, Ether and Creamcoin? In my opinion, certainly not.
Crypto markets have seen their fair share of bad news lately. The IRS confronted Coinbase over user data, China moved to ban ICO’s and froze tens of thousands of investors’ funds, and let’s not forget the double-tax “solution” conversations.
Today, despite all this, Bitcoin’s market cap sits at nearly 100 billion – that’s bigger than some major DOW components. Whilst remarkable, this does not mean it will last forever.
Should you stay or should you go?
A well-diversified portfolio is, and always will be, the key to sharemarket success – this, and a comprehensive financial education.
Yes, Bitcoin has seen some incredible gains driven by new capital entering the market.
Add a splash of hype, newly found consumer trust and subsequent adoption, and you can see why Bitcoin’s recipe for success has panned out.
Unfortunately folks, the future is still poignantly uncertain and you would do well not to have all of your eggs in the crypto basket when, yes when, it all comes crashing down.
Many international governments are all for blockchain technology, as they should be.
It is the unregulated nature of the cryptocurrencies themselves that will see the Bitcoins and Ethers of the world struggle to make it into the mainstream trust, for any amount of time worth remembering.
It is for this reason I say, by all means, dip a toe into the crypto market. Just remember; the hype-train will stop at some time and I wouldn’t be so quick to lose interest or faith in the traditional currencies, backed by government approval and accepted everywhere – after all, bubbles do often pop.