Is it smart to invest in bitcoin?
If you were savvy or lucky enough to be an early adopter, you could have made a fortune in bitcoin.
Its mysterious creator Satoshi Nakamoto is estimated to have made $40bn (£29bn) from it, and there are numerous other known bitcoin billionaires and millionaires.
However, most small-scale investors have only recently become interested in the crypto market as it has been more widely talked about (or hyped up, depending on your perspective).
Find out more: What is cryptocurrency?
Is a bitcoin crash coming?
When assets rise very quickly in price, typically this makes a crash, or at the very least a correction (when the price falls back down to a more ‘normal’ level) much more likely. That is the situation bitcoin is in right now.
Bitcoin was in a bull market (meaning it is going up in value – bear markets go down, some in a flash crash): it took the cryptocurrency 11 years from launch to get to $20,000 per coin, but only three weeks for bitcoin’s price to double from there. Here is a beginner’s guide to investing.
Its recent rise has been stratospheric – bitcoin has soared more than 700% over the past 12 months, and at the time of writing a single bitcoin was priced at an all time high of $63,000. However, is cryptocurrency a reliable long term investment?
Bitcoin could turn out to be “the mother of all bubbles”
Bank of America Merrill Lynch market expert Michael Hartnett,
Whether it’s a smart investment now depends on whether you believe the wild price predictions from crypto fans talking up the cryptocurrency market and their investments on the financial market for capital gains.
To put the price surge in context, and demonstrating the volatility of the sector, the crypto-data firm Coin Metrics reported that cryptocurrencies lost more than $150bn in value on one day in January.