Analysts say that if you had invested in Bitcoin in 2011, you’d be a millionaire, while any new investors are likely in the red.
Where It All Began
Bitcoin has undergone a series of ups and downs since it first arrived at the financial scene in 2008. At one point, the currency was simply trading for a nickel, but the price has certainly come a long way since then despite the rapid price drops of the last 11 months.
At the same time, the most visual difference has occurred between last December and now. Roughly one year ago, Bitcoin was worth just shy of $20,000, prompting many new investors to get involved out of fear of missing the bandwagon. Exchanges like Coinbase saw hundreds of thousands of new users creating accounts for themselves, though less than a month later, things would take a nasty turn.
Bitcoin would begin its descent by falling to $16,000, then $11,000 then 9,000. By the summer of 2018, Bitcoin was hanging around the $6,000 range, where it would spend most of the year’s latter half.
At press time, however, the father of crypto is trading for a measly $4,100. The currency has dropped by roughly 80 percent from its all-time high, and much of last year’s crypto magic appears to have dissipated.
Early Investor? You’re Still Good!
However, bitcoin is still up approximately 428,022 percent from the first of January 2011. Granted someone had invested about $1,000 in bitcoin at that time, they’d likely be a millionaire by now and still gathering returns of approximately 157 percent.
Founder and chairman of Edelman Financial Services Ric Edelman says that now may be a good time to invest in Bitcoin given its lowered price, though he says investors should still be prepared to lose everything they put in. He comments:
You need to invest with two attitudes: that you’re going to hold it for years, even decades and that volatility is an inherent element of the asset.
What Are Others Saying?
Aswath Damodaran – professor of finance at the Stern School of Business at NYU – states that investors shouldn’t put money into bitcoin hoping to replicate the returns experienced during the December hype of last year. He states:
You would have staggering returns on Beanie Babies and Pokemon cards as well, at their peak, but imagine what your portfolio would look like today if you had put your pension fund into them.
He further states that investors need to concentrate on buying low and selling high, even if most of their colleagues do the opposite, and that now may be the best time to re-enter the bitcoin trading space:
People were thrilled to buy bitcoin at $19,000 last year. Those same people don’t want to buy bitcoin at $4,000.
Will Bitcoin ever return to the glory days of $20,000? Post your comments below.
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