Bitcoin has had a remarkable run over the past year. Even after a recent withdrawal, the leading cryptocurrency is still rising nearly 400% since early 2020.
Should investors buy more to benefit from even more upside potential? Or is bitcoin too volatile and too expensive to invest in? This January 11 Fool is Alive video clip, Fool.com contributor, Matt Frankel, CFP, a Industry Focus: Finance host Jason Moser responds to a viewer’s question about investing in bitcoin before its price stabilizes.
Matt Frankel: Let me read this one by Mary very quickly. He said, “Matt, I didn’t realize you mined Bitcoin, a new respect.” Thank you, Mary. If you wait until Bitcoin really stabilizes, would that be too late for real in-game profits? Thank you. First of all, when I did mine, it was a fun experience. I bought some of the mining hardware and didn’t use my computer just as you could back to the day, and a little bit called AntMiner. I got another bit that was just like a little USB, stuff that plugged into a USB port. They were just like small computers. My power bill went through the roof a few months I was doing that.
Jason Moser: [laughs] I can imagine.
Frankel: Yeah, those suck a lot of power, all the mining hardware. I can imagine that – add five years of sophistication to that. I can imagine how much it sucked today. But wait until Bitcoin stabilizes, yes, it might be too late. For all we know, Bitcoin could stabilize at $ 100,000. I mean it’s totally possible. I do not believe Bitcoin is an investment to chase profits. It’s a speculative lottery ticket at this point. There are people who present solid cases that Bitcoin could eventually go to. There are people who present solid cases that Bitcoin could eventually go to a million dollars. It’s very speculative at the moment. If you want to use it eventually as a store value or as a currency, then wait until it stabilizes. If you plan to speculate on it and try to make money, then buy some now, and hold tight for a roller coaster ride.
Frankel: There is nothing wrong with doing that if you know that’s what you’re starting out with. There’s nothing wrong with guessing a little if you know you’re basically buying a lottery ticket. But if you want to use it, which sounds like Mary likes the utility, then I’d wait until it stabilizes before I buy some as a store of value or anything like that.