Bitcoin Up Over 107% YTD Show 46

Bitcoin is up 107.27% this year according the Morning Brew newsletter on Monday. I’m frequently asked about cryptocurrency and what I think about it. I’ll briefly share what it is and what I think about in this show.

If you’ve thought about bitcoin or considered buying it was probably because somebody you knew bought bitcoin. Cryptocurrency holders tend to be raving evangelist for it. It inspires enthusiasm.  

Recently, I read a Kiplinger article titled What to Make of Bitcoin. The article states that major companies have been announcing that they are buying bitcoin. Examples of this are Tesla, PayPal, and Mastercard. This is creating demand for it, and it’s up over 450% in the last 12 months. This has caused many people to wonder if it’s a bubble. 

Little is known about who actually created bitcoin. I tend to be the type of person who doesn’t like secret societies or clubs that exclude people. Bitcoin’s lack of transparency in this regard makes me raise an eyebrow.  Bitcoin was created in 2009 and has experienced significant volatility during its existence. Matt Andrulot, the head of research at a financial advisory firm Verdence Capital Advisors states, “It’s volatile and speculative.” 

 In January, bitcoin lost 25% of its value in just two weeks, and during the coronavirus market correction bitcoin lost 49% of its value. From December 2017 to December 2018, it lost 83% of its value. Talk about a roller coaster! 

From the Kiplinger article, “Because bitcoin doesn’t generate any cash flow or earnings -- and never will -- its price is driven purely by demand so it’s speculative. That said, bitcoin could still have a small place in an investor’s portfolio. But given the sky-high volatility it should take up no more than 1% to 3% of your assets.” Basically, don’t put more in bitcoin than you can afford to completely lose. 

If cryptocurrencies are of interest to you, look at it like an alternative investment asset. Things like gold and silver have traditionally  filled this role, but keep in mind that bitcoin is three to four times as volatile as gold. 

Kiplinger article mentioned 

 Who created bitcoin 

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