As bitcoin surpassed the historic $100,000 mark this month, it has sparked renewed interest and debate among investors. While some see this milestone as an opportunity, others caution against the volatility and risks of entering the cryptocurrency market.
For years, bitcoin has polarized opinions. Skeptics once dismissed it as a passing fad, but its rapid ascent from $1,000 in 2013 to $100,000 today has made it impossible to ignore. Now, many are wondering: Is it too late to invest?
Craig J. Ferrantino, president of Craig James Financial Services, suggests that cryptocurrency is largely a generational phenomenon. “Among millennials, everybody knows someone who’s become a crypto millionaire,” he noted. However, for older generations, the concept often remains elusive.
What Is Cryptocurrency?
Cryptocurrency, including bitcoin, operates as digital money without a central authority like governments or banks. It functions on decentralized networks using blockchain technology, which records transactions and assets securely.
Until recently, cryptocurrency trading was limited to specialized exchanges, which discouraged many would-be investors. That changed earlier this year when U.S. regulators approved bitcoin Exchange-Traded Funds (ETFs), making it easier for everyday investors to buy and sell crypto like traditional stocks.
Is It Too Late to Invest in Bitcoin?
The answer depends on your risk tolerance and investment goals. Caleb Silver, editor-in-chief of Investopedia, believes it’s not too late but advises caution. “Profiting from bitcoin’s rise may be your primary reason,” Silver said, “but it’s important to understand that all cryptocurrencies are highly volatile, unregulated, and widely misunderstood.”
Bernd Schmid, a contributing crypto analyst at The Motley Fool, agrees that a long-term perspective is key. He compares crypto’s current stage of adoption to the internet’s early days in the late 1990s and early 2000s.
Others are more skeptical. Certified financial planner Jonathan Swanburg warns against jumping in due to fear of missing out (FOMO). “If you didn’t like crypto at $20,000, I think you need to look at why you would possibly like it at $100,000,” he said.
The ‘Trump Effect’ on Bitcoin
Bitcoin’s recent surge is partly attributed to President-elect Donald Trump’s pro-crypto stance. On the campaign trail, Trump pledged to make the U.S. the “crypto capital of the planet.” Experts believe his administration’s policies could shape the market further.
David Sacks, a former PayPal executive, has been appointed as the nation’s first “crypto czar,” while Wall Street veteran Paul Atkins has been nominated as SEC chairman. These moves, coupled with regulatory developments, could make cryptocurrency more accessible to retail investors, potentially driving up demand.
How to Start Investing in Crypto
For beginners, experts recommend starting small. “Don’t invest more than you can afford to lose,” Silver advised. He suggests limiting crypto exposure to no more than 5% of your portfolio, given its high volatility.
Investors can enter the market through ETFs, which track bitcoin prices without requiring direct ownership of digital coins. Bryan Armour, director of passive strategies research at Morningstar, highlights several reputable options, including iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund.
Swanburg echoes the preference for ETFs, noting they simplify estate planning and logistical challenges. However, he remains cautious overall, stating, “I don’t recommend crypto to anyone.”
Balancing Hype with Caution
As cryptocurrency continues to gain mainstream attention, the allure of its rapid returns is hard to ignore. Yet, experts urge potential investors to weigh the risks carefully. For those willing to take the plunge, starting with a small, manageable investment may be the safest path forward.
