Home Guides & Resources chevron_right Investing What Do We Think About Bitcoin? Published February 11, 2021 https://www.adviserinvestments.com/wp-content/uploads/qw0121-what-do-we-think-about-bitcoin.mp3 After a meteoric rise in 2017 followed by steep declines, bitcoin returned to the headlines with a furious rally at the end of 2020. Is bitcoin an investment you should consider? Research Analyst Liz Laprade shared our philosophy on the prominent cryptocurrency in our recent webinar,* A Tale of Two Recoveries: Will Main Street Catch Up With Wall Street? Please enjoy the excerpt below and click here for the full webinar replay to hear more. * * * * * Liz Laprade: Is investing in bitcoin a wise move? In 2020 alone, bitcoin was up some 300%, and I think that’s making it easy to forget how volatile it has been historically. In 2017, the value of bitcoin went from $1,000 to $19,000 and then crashed some 80% the following year. More recently, when the market corrected last March, the S&P 500 was down 34%, gold was down 3.5% and bitcoin was down 54%. That was before the run-up on the rest of the year. Do we think it can be a sound investment? Well, you can put money into it and it will appreciate or depreciate in price. But it is a speculative investment. It’s risky and very volatile. I certainly don’t think of it as a preservation of value or a gold substitute. To be honest, it’s hard to even think of it like a stockA financial instrument giving the holder a proportion of the ownership and earnings of a company., since there really aren’t fundamentals backing the value. The value of a bitcoin is basically what someone is willing to buy it for that given day. I’m not completely against investing in bitcoin. I think it’s a really interesting story, but would I allocate a large portion of my portfolio there? Probably not, especially not after it has run up so much in such a short period of time. But I can understand the investment thesis for some exposure. I think as long as you have the right riskThe probability that an investment will decline in value in the short term, along with the magnitude of that decline. Stocks are often considered riskier than bonds because they have a higher probability of losing money, and they tend to lose more than bonds when they do decline. appetite for it, then sure, buy some bitcoin. The advice I’ve been giving is this: Don’t buy more than you’re willing to lose. * * * * * Click here for a replay of A Tale of Two Recoveries: Will Main Street Catch Up With Wall Street? Please contact us at (800) 492-6868 to learn more about our comprehensive wealth management solutions. *Webinar recorded after the market closed on Wednesday, January 27, 2021. This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Our statements and opinions are subject to change at any time, without notice and should be considered only as part of a diversified portfolio. Mutual funds and exchange-traded funds (ETFs) mentioned herein are not necessarily held in client portfolios. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. You may request a free copy of the firm’s Form ADV Part 2A, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs. © 2021 Adviser Investments, LLC. All Rights Reserved. Tags: alternative investmentsbitcoinInvesting