Is Bitcoin a good long-term investment? You will find out the answer in this article.
The cryptocurrency market experienced explosive growth this year due to the increasing number of investors that are rushing in to benefit from it. If you are planning to invest in cryptocurrency, you may be interested in Bitcoin.
Although there are many digital coins in the crypto market, Bitcoin is one of the most popular names out there. It is more stable than the other cryptocurrencies because it has been around for over 10 years.
Most of those that buy Bitcoin do so for a short time; they invest in it and wait for its value to increase, and then sell it for profit. However, is this approach right for you? Or do you need to consider Bitcoin as an avenue for long-term investment- one that you can use to fund your retirement?
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The Risks Associated With Bitcoin
All investments have some degree of risk, and there is nothing we can do about that. However, the risks that accompany buying a cryptocurrency like Bitcoin surpass the risk of investing in an established stock.
Bitcoin may have been around for more than a decade, its existence is still less than most of the companies trading stock market today. And while these stocks have been experiencing fluctuations, Bitcoin has experienced even more severe price swings.
But apart from price fluctuations, there are other dangers of Bitcoin. We are not sure if it will become a widely accepted medium of payment. If it does not, its demand will crash. And once its demand falls, it will also lose its value.
Also, we don’t know the type of regulations that will be enacted for Bitcoin and other cryptocurrencies. Until we are sure of the regulatory issues that are waiting for Bitcoin, it is still a risky investment.
All these issues do not mean Bitcoin is a poor investment opportunity. The question is; ‘is it a good investment for retirement?’ Maybe not.
Since Bitcoin has only been existing for about 12 years, it is not possible to predict if it and other digital currencies will be trading in the next two, three, or four decades. If you still have many years ahead before you retire, this is something you shouldn’t overlook.
Read Also: The Easy 3-Step Bitcoin Buying Guide
Thus, if you are planning to buy Bitcoin today, here are some rules that you should adhere to:
- Don’t invest most of your money in it.
- Prepare your mind for the possibility of losing all your capital.
- Hold it for a limited period.
A long-term investment is only advisable when buying stocks because the market is reputable for rewarding investors that stick with it for a long time. There’s no such history with cryptocurrency.
Bitcoin may end up making you money on a short-term basis. If that ends up being the case, take your earnings and invest them in a stock portfolio that will secure your investment. Don’t think that an investment in Bitcoin today will fund your retirement for the next 40 years.
