Bitcoin is a Bubble. Just google the word and you’ll get a hell lot of results about it. But is it really a Bubble? Are stocks “Bubble” proof? Is Forex safer than Bitcoin?
Well, every investment vehicle poses a LOT of risks. If you don’t know how capable of you in handling them, it means you shouldn’t even putting your money into it in the first place. In simple terms, if YOU can’t handle the fact that once your investment is going down and the next step you will do is to cash it out to play it safe, then save yourself from stress and leave Bitcoin and other cryptocurrencies alone. That’s how bubbles are made.
So why people are investing in Bitcoin anyway?
Bitcoin is a unique investment vehicle. It’s so unique that they are arguing if it’s a commodity or a currency. It’s not a stock so it doesn’t give you dividends that you can use to add to your buying power. Bitcoin isn’t. But it’s not that bad either because holding on to Bitcoin and other cryptocurrency could make a higher return in the long run. This is true to any investment that you can find in the Philippines, whether you’re into Stocks, UITF, Mutual Funds, etc. If you believe that the value will grow maybe it’s good to hold your investment for a long term and live a worry free life. But here’s my take about bitcoin.
It’s a Hybrid investment.
Bitcoin is close to Forex trading. A dollar can’t give dividends either and so is bitcoin. But you can’t use Bitcoin because of its insanely expensive network fees. So the only reasonable step to do it to Buy and Hold and forget that you have an investment. Release your emotions because that is very bad for investment.
If you think being emotional isn’t bad. Just imagine you bought a LOT of Bitcoins way back in 2011. Imagine the value it is today in 2017. If you’re lucky enough to hold it within 6-7 years then it reaps the reward for your patience. Good for you if you are in the latter!
But what if Bitcoin crashes? Does it mean it’s the end of the world?
Not really. Long term investors doesn’t believe so. All investment vehicles goes up and down from time to time, it’s how you handle liquidity is the most important thing you can do in your end. How long can you wait for Bitcoin to rise once it falls? This also means that you are prepared to wait once it happens, but not lose because you still have your bitcoins with you. This is true to stocks or forex investors. Market crashes happens a lot but it’s you that you can handle it.
Hope this helps in deciding whether you are going to invest in Cryptocurrencies in stocks. Just make sure you are emotionally and physically ready in the future. And oh, before you invest, just make sure you have an Emergency Fund so that you won’t use your investment in your expenses.