Bitcoin and the cryptocurrency asset class are likely here to stay. And though the speculative asset could continue to be an incredibly choppy ride from here, one can’t help but wonder if the so-called “digital gold” is worth embracing today as the Bitcoin bull’s eye higher highs and a potential breakout past that $100,000 mark. Despite hearing about Bitcoin and its like in the financial media over the past several years, it’s still difficult to fully understand the value that the cryptocurrency can bring to the table.
While Bitcoin may be like some kind of precious metal on steroids, I do think that there may be value in adding a tiny bit to one’s portfolio for the sake of diversification. That said, it’s more of a “spicy” asset than something — think gold — that takes risk off the table and hedges against severe market downswings. Given its tendency to boom and bust, you don’t want to introduce too much volatility to your portfolio such that you won’t get a good night’s sleep.
Bitcoin: More than just a fad?
For those who are still reluctant to pick up Bitcoin or any one of its Bitcoin exchange-traded fund (ETF) products, there’s no pressure. My bet is that Bitcoin will feel the chill of “winter” once again, perhaps once fear hits the hearts of investors, traders, and speculators. For now, the big question is whether it makes sense to follow in the steps of the big-name elites who’ve embraced Bitcoin with open arms.
Of course, there are some elites, like Warren Buffett, who probably will never touch Bitcoin with a 10-foot pole. While the crypto “fad” may fade at some point in the future, it’s hard to argue that the fad has stuck around for quite a while now. Though I do think Bitcoin and cryptocurrencies are more than a fad, I’m unsure if the asset class is a good buy at current levels.
Some elites are really bullish on Bitcoin.
Indeed, Bitcoin has more than doubled in price in the last year. With so much hype and euphoria surrounding the asset class, I’d be inclined to take a step back rather than punch a ticket at a time when there’s so much fear of missing out (FOMO). It’s hard not to want to get some Bitcoin exposure after billionaire elite Mark Cuban recently stated that Bitcoin is “a better version of gold” under certain conditions.
Sure, Cuban favors Bitcoin over gold, but does that mean it’s time to ditch the precious metals for the latest and greatest Bitcoin ETF?
As always, time will tell. Just because the elite has a stake in Bitcoin does not necessarily mean you’ll do well by buying at today’s market prices. Whether we’re talking about Mark Cuban, Jack Dorsey, or Tim Cook, it’s important to remember that you will not get the same price (or cost basis) as the billionaire elites. That’s why it’s so vital to do your own homework and not follow anyone, no matter how successful, into an investment.
The bottom line on Bitcoin
For the most part, I view Bitcoin as a here-to-stay. But I’m not a big fan of the asset at close to $100,000. That’s expensive. Perhaps once the crypto scene cools off, I’d be more willing to change my tune. In the meantime, there’s no shame in taking a tiny nibble of Bitcoin or sitting on the sidelines entirely as you wait to see how the asset evolves over time.
Perhaps the real upside could come from the Trump administration and potential pro-crypto moves that could give Bitcoin a sizeable shot in the arm. However, just how much of the potential catalyst is baked in at around $95,000 remains the big question. Either way, I view Bitcoin as more than a fad, but one that accompanies an elevated risk profile at current prices.
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