Yes, Go ahead and buy BITCOIN only if you can afford to lose your entire invested money.
Does it scare you?
Now maybe I am very conservative or do not want to explore new areas of investing But I am certainly not want to throw my money in the thing which does not have any underlying asset or value.
Have a look at 1-year price graph of BITCOIN
Chart source: Coindesk
BITCOIN has surged close to 900% in the just 1-year (as of 29/nov/17). That seems to be a marvellous return on any investment.
There have been numerous investment options for investors like stocks, bonds and fixed deposits etc. Now there has been a new option for investment named BITCOIN.
Most of us do not understand what BITCOIN is and how it can be revolutionary?
The underlying purpose of BITCOIN was to provide country less currency which cannot be controlled by any government. It was meant to be used for a transaction so that you can buy or sell any goods or services across the country boundaries. Now, BITCOIN price changes every hour at 3-5% rate. As a result, it cannot be accepted as a payment type.
Does anyone think with 3-5% fluctuation in rates anyone still wants to buy or sell anything with BITCOIN?
A proper answer will be no. No seller will be willing to see so much volatility in his revenues as his profits entirely depend on it. As of now, (Dec 2017) FOMO (Fear Of Missing Out) is getting hold of everybody. Nobody wants to miss the opportunity to buy BITCOIN. That is the reason we saw a significant rally in last 4 months. It has moved from 6500 to 12,000 levels.
Is this a BITCOIN bubble?
Maybe yes, A bubble is often misleading term. Whenever a thing is termed a bubble people tend to think, it is going to collapse soon. But the truth is bubbles are hard to picture and you never know when they will grow more or will burst out.
One thing is certain, exponential growth which BITCOIN is currently eying cannot last forever.
Why not invest in BITCOIN?
- There is no underlying assert which BITCOIN has.
- No one controls BITCOIN, therefore it can surge to infinite levels or can decline upto 90% or even 100% within hours.
- With such a volatile prices, it could not be used for payments.
I would not recommend anyone invest their hard earned money in such a volatile instrument. There are plenty of investment opportunities out there. And certainly, BITCOIN is not among them.
Read: Do not let your emotions control your investment decisions
Read: How to invest when the market is all time high?