Still invested in Bitcoin? This is what I think you should do
It’s been an amazing two years for Bitcoin. A little over a year ago, everyone was talking about it. Bitcoin had started 2017 at a price of around $900 and by the end of the year, it had soared to nearly $20,000. Cryptocurrency investors had seen their wealth rise significantly over the course of 12 months, and it appeared that there was no stopping the upward trend.
However, the last 12 months have been a completely different story. Bitcoin has lost its mojo and the currency has been locked in a nasty downward trend. Today, its price is around $3,800, meaning it’s fallen around 80% from its 2017 high.
Sitting on losses
Anyone who got in on Bitcoin early and cashed out while its price was still rising most likely did well for themselves. You hear stories about people who bought at $5 and sold at $10,000 and are now sipping margaritas on their yachts in the Caribbean.
However, plenty of investors didn’t sell their Bitcoin while it was rising and still hold the cryptocurrency today. And after Bitcoin’s recent price decline, I’ve no doubt that many of these people are sitting on large losses. If they bought the cryptocurrency at $10,000, or even $15,000, when sentiment was high and everyone was panicking about missing out, their investment will now be worth considerably less than they paid for it.
What I’d do if I held Bitcoin today
I don’t hold any Bitcoin, as I never saw much appeal in the cryptocurrency. I’m more of a get-rich-slowly type investor.
However, if I did hold Bitcoin today and was sitting on losses, I’d give serious consideration to selling up and moving on. I say this because, as I wrote here, I think Bitcoin can go a lot lower. At this stage, there’s nothing really holding it up. It has no cash flows and it doesn’t pay any dividends or interest to investors. It also has very little real-world use as there aren’t many things you can actually buy with it. Furthermore, its extreme volatility has shown that it’s totally unsuitable as a regular currency. The upward trend is clearly over and it’s now locked in an ugly downward trend. As a result, I wouldn’t be surprised at all if its price fell back to $1,000.
Selling at a loss isn’t easy. No one likes losing money – it’s painful. However, if selling now can prevent further losses and allow you to walk away with at least some of your investment, it’s an option that’s certainly worth considering.
Hold or fold
So, ultimately, the way I see it is that if you still hold Bitcoin, you need to make a call on its future price. If you believe Bitcoin has a future and its price will rise again, it could be worth holding onto it. However, if you think it’s going lower, the best option may be to sell now, in order to avoid further losses.
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