Anyone who invests in Bitcoin expects the best, but they must also be prepared for major recessions. While Bitcoin has recovered many times, there is also a chance that it will fall to zero, for example, if several cryptocurrency platforms fail and a massive sell-off occurs. Cryptocurrencies are very risky and not like conventional investments in the stock market. It is important to be aware of potential Gold IRA scam investments as well.
Bitcoin could be a good investment if it fits your risk tolerance and your overall market outlook. The history of the cryptocurrency market is quite predictable over longer time horizons. Bitcoin and Ethereum have been trading in relatively regular cycles and both have recovered from all major declines (not including the most recent one yet) and then reached new all-time highs. In our view, Bitcoin and other cryptocurrencies are speculative investments. We don't think Bitcoin fits into traditional asset allocation models at this time, since it's not a traditional commodity, like gold, nor a traditional currency.
Bitcoin's dramatic volatility is mainly due to supply and demand, not to inherent value. Bitcoin has no profits or revenues. It does not have a price-benefit ratio, a price-sales ratio or a book value. Traditional value metrics don't apply, so there are no methods for evaluating their value that we support or consider persuasive.
Bitcoin has a short history of investing full of highly volatile prices. Whether it's a good investment depends on your financial profile, investment portfolio, risk tolerance and investment objectives. You should always consult a financial professional for advice before investing in cryptocurrencies to ensure that they are right for your circumstances.
