Considering a Bitcoin investment? Expert insights and essential precautions to bear in mind.
Bitcoin, the popular cryptocurrency, has reached a new all-time high, surging by nearly 50% over the past year. On May 22, the digital asset reached an unprecedented $112,000 (£82,700), and experts are optimistic about its potential future growth, although this is not a guaranteed outcome, given its history of steep drops following significant increases.
The recent surge in Bitcoin's price can be attributed to several factors. Since Donald Trump's presidency, the cryptocurrency has benefited from his administration's supportive stance on digital currencies. The US government has taken steps to regulate the industry, and the Genius Act, aimed at regulating stablecoins, is making its way through the Senate. Additionally, reports suggest that President Trump's social media firm could soon invest billions into cryptocurrencies, although these plans have been denied by the President himself.
Investor confidence in Bitcoin has grown as well, with an increasing number of institutional investors, such as large companies and wealth management firms, purchasing the cryptocurrency. The launch of Bitcoin exchange-traded funds (ETFs) in the US has also attracted fresh interest from investors.
Experts are divided on whether Bitcoin's price will rise further. Some see increasing interest from institutional investors as a sign that the rally has more room to grow. Despite the differing predictions, financial experts advise caution when investing in Bitcoin, suggesting that it should make up only a small fraction of an investment portfolio. Given Bitcoin's history of sharp drops after strong periods of growth, it is essential to only invest money that can be afforded to lose.
Nic Puckrin, founder of The Coin Bureau, believes the current rally could be more sustainable than previous ones, with Bitcoin reaching $120,000 (£89,000) from its current level in the near term and $150,000 (£111,000) in the long run. Jackson Wong from the Good Money Guide cautions that as Bitcoin's market value has reached $2 trillion, doubling its price would require substantial new investment.
The future of Bitcoin will be influenced by various factors, including the monetary policy of the US Federal Reserve and the investments made by large institutional investors. Some analysts are optimistic about Bitcoin's potential to exceed $500,000 (£370,000), while others predict a possible fall below $30,000 (£22,000). David Belle, a trader and founder of Fink Money, is among the more bullish cryptocurrency experts, predicting that the price of Bitcoin could reach $1 million (£839,000) within the next decade.
Investors looking for less risky alternatives to Bitcoin might consider diversifying their portfolios with gold or commodities. Thomas Becket from Canaccord suggests that, in today's uncertain world, he feels more comfortable holding some exposure to these assets as a way to diversify. As for other cryptocurrencies, some experts believe Bitcoin remains the "gold standard" among digital currencies, with altcoins being more volatile and risky. Solana and Ethereum are considered potential alternatives for investors seeking alternatives to Bitcoin. Investors should exercise caution and conduct thorough research before investing in any cryptocurrency, as some have questionable legitimacy.
- Institutional investors, including large companies and wealth management firms, are increasingly purchasing Bitcoin, thereby indicating a growing confidence in the cryptocurrency.
- Financial experts advise that, although there is potential for Bitcoin's price to rise further, it should only comprise a small fraction of an investment portfolio due to its history of steep drops following significant increases.
