Bitcoin, everything that goes up… goes higher?

I really think, I was in the process of total denial when writing about this topic. But when even your closest family circle tells you why we didn’t buy some Bitcoin. I think it’s time to talk about this topic.

1.- What is Bitcoin?:

Trying to explain in a few words what Bitcoin is, without having to go down the complex path of explaining what blockchain technology is or who Sathoshi Nakamoto is; it’s really simple it’s just an electronic token or as explained by Carsten Sorensen (professor at the University of London) it’s literally a number.

2.- Why is everyone talking about Bitcoin?

All people would like to become millionaires overnight, and the price of Bitcoin has grown by more than 379% in a year, that is, a person who invested $1,000 in January 2020 on January 20, 2021 would have more than $4,787 .

3.- And why has it risen so much?

As in any market, things are worth what people are willing to pay for them, and there really is no clear explanation and there are mainly two theories:

1.-) Paypall in October 2020 began to allow its use and a group of institutional investors have invested in it

2.-) Some specialists say that it is simply a bubble pushed by small investors and speculative investment funds that are taking advantage.

4.- Why do they say it’s the new digital gold?

In these times of pandemic, where many governments have injected large amounts of money into the economy, it is thought that this could cause higher inflation. Bitcoin has the characteristics that it does not belong to a government. And its quantity is limited to a finite amount, which is why it is seen by some as a protector of value.

5.- And why do they say it is a dangerous investment?

In a single day, Bitcoin fell by 17% and its price is quoted online 365 days a year. The reality is that very few control this currency. 95% of all bitcoins are controlled by 2% of the Bitcoin accounts which are anonymous.

Several specialists and market regulators have said. Remember that the value of Bitcoin can disappear overnight, as happened with Ripple, another cryptoactive that saw its price drop by half overnight, due to a demand of the regulator.

6.- Is it a financial bubble?

Only time will tell. But if we can say that in the last 50 years there has been no investment that has risen so much. And so fast in such a short time and the Bank of America analysts call it the Mother of all financial bubbles.

7.- How should I view an investment in Bitcoin?

It should be viewed as a speculative investment, which is risky. The consensus of the majority of advisors in the USA points out that people should not place more than 1% of their money in this type of crypto active. An hourly financial advisor or hourly financial planner can help manage these investments. Additionally, it is crucial to ensure that this value does not rise so much that it represents a greater risk; that is the time to sell.

And then, everything that goes up always goes up or down. What do you think?

The Role of Financial Planning

Given the volatile nature of Bitcoin, it’s essential to consult with a certified financial planner or a fee-only fiduciary. These professionals can provide hourly financial planning to help ensure that any investments in cryptocurrencies do not jeopardize your overall financial health. They can also help you understand the importance of diversification and risk management in your investment strategy.