Considering the fact that bitcoin is everywhere today, and dominantly taking the media headlines by storm – you may have considered investing in it to make some quick cash or sustainable wealth, but professional analysts at Time Money have warned against this – simply because the cryptocurrency fluctuates unexpectedly and not stable at all.
The bitcoin virtual currency is very popular today in China and Venezuela where high demands for it is hiking its value, but its high volatility has become a thing of concern to investors and analysts in the West.
For instance, the value or price of a singly bitcoin rose to $1.153.02 on Thursday morning, but dived by late Thursday afternoon and dropped by $200. The price of one bitcoin reached its highest value in November 2013 when it reached $1,165.89, but it fell later and have continued to fluctuate up and down since then.
While it is true that bitcoin generated over 100% return on investment last year, financial experts seem to agree that it is “also five times more volatile than the S&P 500. Bitcoin is “an extremely risky investment,” said Campbell Harvey, professor of finance at Duke University.
“It’s really, really not worth it for the ordinary consumer,” said Mathew Elbeck, professor of marketing at Troy University. According to the marketing expert, it is possible to purchase bitcoin at a low price one moment and have its value drop before you try to sell it the next moment. Its price may have dropped within one hour of buying and selling again.
It is advised that those people still willing to invest in bitcoin should only commit a small part of their money which they can afford to lose in any investment, since the cryptocurrency is not stable as a stand-alone investment.
Bitcoin is performing excellently with rising prices in China and Venezuela among other places because there is no money in circulation and the governments place strong restrictions on moving money or other stronger assets outside of such countries.
Bitcoin was created by an anonymous programmer or group of programmers in 2008 and is said to have no central authority anywhere.