Should I invest in Bitcoin? JPMorgan Predicts Bitcoin Price Could Rise Over $146,000 in Long Term
When the banks start being greedy, I start to worry. The issue isn’t Bitcoin, but asset allocation. If you invest in an asset, such as Bitcoin, how much of your wealth do you allocate? At £23,000 for 1 Bitcoin, are you going to invest if you only have £50,000 available? If you have over £2m, is 1% of your assets worth the risk? These are your decisions, but what is the risk? Is it worth it? Can the investor with £2m, afford to lose £23,000…possibly, but equally, if Bitcoin increased by 100% to £46,000, would that change that investors world? No.
Imagine a day at the races. A punter picks a number of winners and is feeling particularly smug. After a winning streak, does he/she go to the races again and bet again? Absolutely? It’s overconfidence bias. They think they have the skill, or luck is with them, whatever the reason, but its actually overconfidence at work. The next question, what are the chances of them winning again? Statistically less so. And if the winnings get bigger, so the bets get bigger… until the wheels fall off. Gambling has only one winner. If you decide to bet on Bitcoin, you need a plan. Without a plan, your emotions could be dealt a blow that impacts on how you manage your assets in the future; equally, if your emotions are uplifted, you can make poor decisions on the back of feeling good. But remember, if you win, you may be lucky, but it is luck.
Bitcoin is gambling and speculation, it is not investing. As long as the difference is clear, and you have a well thought out strategy, your future emotions are less likely to push you into poor decisions. Of course, it feels exciting because of the euphoria, and that’s what traders love.