Hardly a day goes by that the topic of bitcoin or other cryptocurrency assets doesn’t come up in meetings with clients and prospects or from friends and relatives who want to know, “what all the buzz is about?”
The message is the same, regardless of who’s asking: Cryptocurrency is not a currency at all. It’s a speculative asset class that is not appropriate for everyone. Only people with a high-risk tolerance should consider cryptocurrency assets.
Like other alternative assets, cryptocurrency can be illiquid at times, and its current values may fluctuate from the purchase price. Cryptocurrency assets can be significantly affected by a variety of forces, including economic conditions and simple supply and demand.
While cryptocurrencies are speculative, it's important to point out the markets appear to have matured over the past few years, and there are several trading platforms available in which to buy and sell "coins." Major banks and other large institutional investors have recently become investors, which is giving cryptocurrency legitimacy as an investment option.
If you are interested in one of the cryptocurrencies, a good first step may be to keep an eye on them for a period of time so you can experience first hand the fluctuations in price. A good example of Bitcoin's volatility is that it increased 308% in 2020, but has already fallen 10% in 2021.
Keep us in mind as you explore the cryptocurrency world. While we do not directly trade cryptocurrencies, we are more than happy to discuss the pros and cons of coin ownership and the current events that may be driving price changes.
What’s the Buzz with Bitcoin?
January 21, 2021