It was a little more than a year ago that Bitcoin hit its peak price of just under $20,000. Since then, however, the cryptocurrency has crashed heavily, losing around 80% of its value. At around $4,000 today, there is little to no hope of Bitcoin ever climbing to those heights again. With Facebook, Google, and many other companies banning activities relating to crypto, it’s harder than ever to generate the hype and excitement that helped propel Bitcoin to the unsustainable levels it reached a year ago.
It’s a hard lesson for investors on the dangers of making speculative purchases and on just how quickly things can go south. It took a little more than a month for Bitcoin’s value to split in half and by the end of January it was struggling to stay above $8,000. Although there were brief bumps in price along the way, the cryptocurrency never regained the form it once had.
And as bad as the decline has been, it’s possible for it drop even further down in price. It was a speculative buy in 2017, and nothing has changed since then.
The takeaway from all this for investors is to avoid rapidly-rising stocks or commodities. Unless there is a legitimate reason for something to rise in value, there’s a good chance an adjustment or correction could be right around the corner. While it might be tempting to jump aboard the bandwagon, the risks are significant in doing so.
Without any analysis, you’re not investing. You’re just gambling with your money.