Thinking of buying bitcoins? Know the risk

Have you heard of bitcoin, the digital currency?

If so, you may have heard it recently doubled in price, in late 2020, which has many people scrambling to jump on the bandwagon and make an investment.

But before you buy some, it’s important to know the risks.

Bitcoin is red hot. This digital currency ran up from $ 20,000 in December to $ 40,000 by January 10th, making big money for investors.

But then it dropped 20 percent, burning investors who arrived late for the party. Since then it has gone up and down as much as 10 percent in a day.

Fortune magazine says bitcoin is a bubble that has popped several times, most recently in March 2020, when it plummeted 60 percent.

Jim Cramer of CNBC says he can be part of your investments and says he owns some.

But he warns just playing what you can afford to lose, just like in a casino.

Know the risks of any investment bubble

But from the “unless that smells“file, what can happen when a bubble bursts?

Most younger investors may not remember the 1999 dot-com bubble, when any stock with .com finally doubled in days.

It all collapsed when the bubble bust dropped, and late investors fortune.

The poster child for the dot-com bubble was Pets.com, the online pet supply company with the infamous sock puppet, which grew way too fast. (His name was later bought by PetSmart.)

Bank of America calls bitcoin the “mother of all bubbles,” so invest accordingly.

It’s not a scam, which means you could make big money. But you could lose big money too.

Could bitcoin soon double or triple again? Sure.

But it could also dive, as it has many times before, so invest with cash that you can afford to lose, and don’t waste your money.

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