Still, many experts say Bitcoin is on its way to passing the $100,000 mark, though with varying opinions on exactly when that will happen.
Some experts are more bullish.
Others are hesitant to predict a number and a date, but rather point to the trend of increasing value over time.
And it isn’t just crypto insiders who are making Bitcoin predictions.
The whole concept of supply and demand only works when people want something scarce — even if it previously didn’t exist.
“It actually does almost kind of seem like a scam,” Merchan says about Bitcoin’s origins.
“I’m a big believer that if it’s not in cash, you don’t really have that money because in crypto, anything can drop dramatically overnight,” Merchan says.
“Crypto technology is being adopted at a faster rate than humans first adopted internet technology,” she says.
Bitcoin adoption has been increasing at an annual rate of 113%, according to data from the digital asset management firm CoinShares.
CoinDesk reported last month the number of new wallets worldwide increased 45% from January 2020 to January 2021, to an estimated 66 million.
Similarly, Treasury Secretary Janet Yellen recently said stablecoins — a type of crypto linked to the value of the U.S.
The conversation on regulatory policies is “patchy,” said an industry white paper published by Flourish, a fintech platform designed for investment advisors.
When China banned crypto in September 2021, for instance, investors saw the price of Bitcoin drop, though it has since risen and resumed its usual volatility.
Finally, another major influence on Bitcoin’s price is a cycle known as halving.
Halving influences the rate at which new coins enter circulation, which can impact the value of existing Bitcoin holdings.
As with any investment, financial planners and other experts advise against letting Bitcoin’s price fluctuations lead you to emotional decision making.
That’s part of why experts recommend not investing more than 5% of your overall portfolio in cryptocurrency, and never to invest at the expense of saving for emergencies and paying down high-interest debt.
Since crypto is still new to most people, it’s OK to wait and see how things unfold before putting your money on the line.
Before investing in Bitcoin or any alternative assets, ask yourself what you want to achieve from your participation in this particularly volatile market, and why.
Financial planners don’t have a bias against cryptocurrency, Gutierrez says, particularly if a client expresses an interest in learning about it.
“Our take is that we don’t think you need Bitcoin in order to reach financial goals,” she says, adding that the average person should favor simple ways of investing that are easy to understand.
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