The price of Bitcoin, which is by far the largest cryptocurrency by market cap (around $1.17 trillion), has doubled this year. At the time of this writing, one Bitcoin was trading around $54,000 just a few days after making new highs just shy of $65,000. This is a gain of about 800% from April 2020.
Over the long term, the price of Bitcoin has been rising because it has benefited from growing mistrust of fiat currencies. Its rise has also been fuelled by the mad borrowing of government to fund stimulus packages. In addition, Bitcoin, once a fringe investment, is becoming more mainstream by the day. Investment banks, like Morgan Stanley and Goldman Sachs, are beginning to offer their clients access to Bitcoin funds and other crypto investments. Coinbase (Nasdaq: COIN), the best-known cryptocurrency exchange has gone public and is the first to be publicly traded on an exchange.
For many years Bitcoin was considered as inscrutable as it was risky. That’s less the case these days, with endorsements by Wall Street via the various crypto funds and the Coinbase listing.
It is never to late to diversify your portfolio. After a correction of about 20% prices are more attractive again. Consider putting a small portion of your portfolio into Bitcoin. Not all at one time and don’t go wild. Do not put more than 5% of your money into any one single asset, certainly not one that remains as risky as Bitcoin.
Sven Franssen