Is Bitcoin a Good Investment in 2021?
In absolute terms, Bitcoin’s dominance is undeniable. As the king of cryptocurrencies, it posted a staggering 300% gains over a one-year period, beating the 31% of the S&P 500 and 40% of the S & P / TSX Composite Index for the same period on the 9th, 2021.
That is to Bitcoin’s sharp fall in April 2021 from its all-time high of more than $ 64,000 wiped out nearly half of its market cap.
As with any other speculative investment, investing in Bitcoin could enlarge your losses and profits, says Tina Tehranchian, S.enior Wealth Advisor Assante Capital Management Ltd.
“At this stage in the game, it is a very high risk investment that should only be attempted by those who can endure the price volatility and who can afford to lose their Bitcoin investment,” she says.
One way to offset Bitcoin’s volatility is to buy right and hang on, notes Gaby Hui, director at Merkle Science, a blockchain predictive monitoring and investigation platform that helps crypto companies, financial institutions, and government agencies conduct illegal cryptocurrency activity impede.
“Just looking at the performance of crypto versus stocks over the past few years, it is [bitcoin] is worth the risk, “she says, but with the caveat that investors should keep an eye on a longer horizon and not be frightened by the fluctuations in Bitcoin.
Another argument in support of Bitcoin points to “Studies that have shown that Bitcoin has poor correlation with stocks and that adding exposure can help you create a more efficient portfolio,” says Hui.
Fear of rising inflation has also fueled the appeal of Bitcoin. In fact, investors with some risk tolerance are already buying Bitcoin instead of gold, a safe haven held to protect against inflation. “Gold has been used to protect against inflation for decades, just as investors use Bitcoin today,” observes Hui.