Hey Taylor - I’ve been tracking this Bitcoin surge and plummet and it’s got me dizzy. Any thoughts on what it means for cryptocurrency and the overall markets?
Hey Monica - Two great questions with very different answers. The transition from 2020 to 2021 was a wild time, and Bitcoin owners probably got the most thrills, even as things have come back down. I’m gonna answer your question in three different phases to keep things tidy.
Markets. The doubling of Bitcoin prices over a couple of weeks was a pretty great sign for market growth. Buyers don’t go that nuts unless there are plenty of signs that money will be moving freely in the near future, and activity within centralized banks and governments makes it look like people aren’t about to tighten the purse strings. Hopefully, this means that Bitcoin’s 25% nosedive over two days isn’t a sign of things to come. When it comes to this particular stock, I think the positive trends are more telling than the negative ones, overall.
Bitcoin. Bitcoin remains the cryptocurrency to power all cryptocurrencies. It’s got the name recognition and has weathered 80% drops in the past. There’s no need to look any further when trying to assess the crypto market. Some people think a Bitcoin might really be worth multiple hundreds of thousands of dollars, which sounds crazy until you think about how high the price is right now (even after the drop). If you went back in time and tried to explain Bitcoin to yourself in 2000 or 2005, it would have been a very confusing conversation. Based on the limited number of coins and the proven technology, there’s no reason to expect a drastic, lasting change with this currency.
Crypto in general. Since you can’t really spend your Bitcoins anywhere aside from a handful of places, the value remains prospective. The idea is very enticing and makes sense based on the trajectory of all things tech. Nevertheless, with a single Bitcoin costing a bajillion dollars and most people still walking around with $1 bills in their wallets, there’s no way we’re anywhere near a shift from fiat money to crypto. We might be inching toward more of a shared space, where physical dollars are exchanged in stores and restaurants and crypto gets more of a foothold in e-commerce, but even that is a long way off. These digital coins clearly have a ton of investment value and are worth having in your portfolio if you buy at the right time, but you don’t need to worry about them taking over the financial world.
If you missed this year’s opportunity to make hundreds of thousands of dollars on Bitcoin, don’t fret too much. You’ll have more opportunities. Good luck, Monica!
Disclosure: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. To submit a question to be answered in this column, please send it via email to Question@GoFarWithKovar.com, or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.
