As Bitcoin went down several notches more last week, investors are starting to wonder if investing in digital assets will still be worth it in the long run or if it’s time to cut their losses and sell.
The world’s number 1 cryptocurrency was down by 5% as trading ended on Tuesday, July 20, dropping under the critical $30,000 level – the lowest since June 22nd. Market watchers say this slump parallels the stock markets’ dismal activity on Monday, July 19th, which caused a drop in the value of several key cryptocurrencies. Ethereum’s Ether was down by 6%, while Ripple’s XRP fell by 9%.
As a result, the collective value of the cryptocurrency market was diminished by nearly $90 billion as trading ended for the day.
Where to now?
This current market downtrend is disheartening but not unexpected. Since April of this year, Bitcoin’s value has been falling steadily after hitting an all-time high of $65,000.
While its value has grown exponentially over the past ten years, 2021 certainly isn’t one of the crypto’s growth periods. BTC has dropped by over 50% in mid-July and has all but erased its gains for the year. Nevertheless, several analysts say that Bitcoin is due for yet another upward surge in its value.
If you ask New York University professor David Yermack about this, however, he isn’t holding his breath.
Not for the faint of heart
“[Bitcoin] has been a risky investment for the people [and] it’s a purely speculative asset,” Yermack says of the cryptocurrency, which he feels will not bounce back for a while. The professor of finance at NYU’s Stern School of Business went on to say that the only thing people can be sure of where cryptos are concerned is volatility.
Yermack isn’t the only financial expert who is trying to sway – or wean – people off Bitcoin at present. Others like CoinFlip CEO Daniel Polotsky opines that anyone thinking of getting into crypto should only invest what they’re willing to lose.
In which case, Polotsky suggests that delving into cryptocurrencies is not a good choice for people who will need money ASAP, like retirees or for those who want to profit from frequent trading.
He went on to say that getting into cryptos can be addictive, especially when investors start trading.
Other experts suggest that potential investors should look at their current range of assets before investing in cryptos or other digital assets. Many believe that people should only get into cryptocurrencies if they have any extra cash to burn.
Anjali Jariwala, the founder of Torrance, CA personal finance firm Fit Advisors, says that this is one of the few sensible ways to get into cryptocurrency without too great a risk on one’s finances. However, she also suggested that people err on the side of prudence: buy Bitcoin only on days when it’s down and not to be swayed by current fluctuations in the token’s price.