UPDATE: As of February 19, 2021 the price of bitcoin soared over $55,000 per coin. We will continue to watch this space.
Bitcoin has hit record highs in the last weeks, soaring past $20,000 per coin for the first time on December 16 and soaring even further past that in the days following.
The digital currency is on a tear, up more than 180% just this year. Yeah, if you’ve been holding onto a coin or two for a while now you are probably popping bottles right about now.
Naturally, with something on such a meteoric rise, people have opinions that are all over the map on whether now is the right time to invest or not.
Galaxy Digital CEO Michael Novogratz — he’s long been bullish on crypto — has predicted Bitcoin could reach $55,000 or even $60,000 by late next year.
Tyler and Cameron Winklevoss — famous for their role in Facebook and early Bitcoin investors — have said they could one day see Bitcoin hitting $500,000.
Here are a few things to consider before you invest in Bitcoin:
Fist, Take Stock Of Your Individual Financial Situation
To do that, look at things like your net worth, your expenses, and your credit score. Ask yourself some questions about your financial situation. What other investments do you have? And most importantly, are you on track for all of your financial goals? What are you looking for your portfolio to achieve in a year?
Do Your Research
Bitcoin is different than other investments as it produces no “earnings,” pays no dividends, and pays no interest. Its value is dependent on how much someone is willing to pay for it in the future. That differs from investing in the stock of a company when you are assessing the future earnings of a company that produces goods and services. How to buy and withdraw Bitcoin, and the taxes you’ll need to pay on Bitcoin are other areas to consider.
Make Sure You Are Diversified
You don’t want Bitcoin to be your only investment. Take stock of the rest of your investments and make sure that when you do decide to buy Bitcoin it isn’t the bulk of your investments.
Feature Image: Twenty20