More and more investors want to benefit from a rising Bitcoin price. However, the recent price setback clearly shows that there are some pitfalls.
What investors should consider
Bitcoins should only be a very small part of the portfolio
Bitcoins are becoming increasingly interesting for many small investors, as they seem to lure with particularly high profits. But investment is also above-average risky. The price fluctuates heavily and even experts sometimes disagree on the reasons for the high volatility.
Bitcoins are therefore not suitable as a reliable investment, for example for old-age provision. The cryptocurrency is rather a speculative admixture. If you still want to play, you should think carefully about how much money you want to invest. The rule of thumb is: Only invest so much that you can live with losing all of your money. In the overall portfolio, the investment in the digital currency should only make up a small part, experts recommend five to ten percent.
Get plenty of information beforehand and consider any uncertainties
Investors should learn about how bitcoins work and the risk involved before investing. Because it is not only the fluctuating course that harbors uncertainties. Regulatory efforts by countries and banking supervisors could also influence the future course. Unlike the euro or dollar, bitcoin is not backed by a central bank, no company, no government is behind the cryptocurrency. You may use like this Bitcoin robot to check before investing.
It is also unclear who is responsible for overseeing the crypto exchanges where investors can buy bitcoins. This decentralized structure is what is special about cryptocurrency, but it also harbours risks for investors. When investors invest in a company’s stock, the shares are somewhat backed by the company’s asset value. Bitcoin basically has no real value.
Basically, investors only benefit from price increases when fresh money flows into the system. The Bitcoin itself does not generate any income.
Compare investment opportunities
If investors decide to invest in bitcoin, they can buy a bitcoin or a fragment of it directly on one of the crypto exchanges. If the price then rises, investors benefit immediately. But there are other ways to benefit from a rising Bitcoin price.
Those who want to invest indirectly in Bitcoin can also buy shares in companies that benefit from a rising price of the currency.Read More