Investing Intelligently in Bitcoin

It’s hard to turn on the news or open the pages of the financial papers without reading an article on bitcoin. The most popular cryptocurrency available, bitcoin seems to be gaining momentum all over the world. More and more countries around the world are legitimizing it as currency. Moreover, its value has risen exponentially in a very short time. For that reason, many people are trying to get in, if not on the ground floor, at least somewhere in the lower section of the building, before the bitcoin elevator shoots right to the top.

Cryptocurrencies like bitcoin allow people to make and receive payments digitally without the need for a third party like a bank or credit card company. And some investors view it as a way to get rich quickly. However, those who do will likely find they won’t quite be satisfied. For one, the value of the cryptocurrency hasn’t gone up in a linear fashion. It has actually been more like a roller coaster, and it’s that kind of volatility that unnerves investors, especially those who are all about protecting their money. As a result, bitcoin remains a bit of an iffy proposition for many people.

The concern that its price could be headed for a steep drop is an understandable one. As a matter of fact, that concern alone could keep many from even dipping their toes in the cryptocurrency pool. Nonetheless, if you’re intent on raising money for your business, you might decide to take the plunge and invest in bitcoin. If you do, there are ways to make it less like whitewater rafting and more like smooth sailing.



Don’t Go Overboard

The temptation among less-experienced investors is to assume that the rising value of bitcoin is unstoppable. That kind of thinking is foolhardy. Keep in mind that very few investment opportunities make that kind of a leap without a break in momentum. As a result, it might be best to limit your exposure initially. In other words, make bitcoin just a small portion of your overall portfolio. If it grows, that’s great. But if it tanks, you won’t be damaged to a great extent.



Timing Troubles

If you’re a fan of the investment strategy known as day trading, which requires many trades in a short amount of time in an attempt to time the market, you probably won’t be bothered too much by bitcoin’s volatility. But maybe you’re hoping to hold on to your investments for a long time. In that case, it’s best to just grab the cryptocurrency when it’s at a price you can afford and hold on to it. Trying to predict its movements could lead to your losing money.


The Old Principles Apply

Bitcoin might be the next big thing in the investment world. But principles as old as investing itself should still rule your choices. That means you should strive to keep your portfolio as diversified as possible. To do that, balance out your investments, not only with other types of cryptocurrencies but also by finding other financial instruments in which to place your money.

These are some of the ways in which you can give a nod to bitcoin without going overboard. Rationality and practicality should always win the day, no matter what investment your choose.