However, some note that the new high in the price of bitcoin does not mean that this commodity is going normal. The $100,000 level is “merely a psychological factor and ultimately a number,” Dan Coatsworth, an investment analyst at British investment firm AJ Bell, wrote in a statement Thursday.
That being said, bitcoin could continue to climb even higher, especially if Trump makes good on his promises of more crypto-friendly regulation once he’s in office. If Trump actually makes a bitcoin hoard, for example, supply changes could drive the price forward.
“It’s hard to overstate the magnitude of the change in attitude in Washington post-election,” Matt Hougan, chief investment officer at Bitwise Asset Management, said in an email Thursday, stressing that rates could continue to rise if the trends persist. “There’s a lot more demand than supply, and that’s often a pretty good recipe for success.”
However, as with everything in the volatile cryptoverse, the future is never promised. Global regulatory uncertainty and environmental concerns about “mining” bitcoin—the creation of new, energy-consuming bitcoin—are among factors analysts like Coatsworth note could hinder future growth. Also, since it is still a small asset with a history of volatility, long-term earnings potential remains to be seen.
Is it too late to invest? What are the risks?
Today’s excitement about bitcoin may make many who are not in the space want to get in on the action. For those looking to invest, Hougan says it’s not too late—noting that bitcoin is still nascent and most institutional investors “still have zero exposure.”
At the same time, Hougan and others maintain that it’s important to tread carefully and not bite off more than you can chew. Experts continue to emphasize caution about crypto’s “FOMO,” or fear of missing out, especially among small investors.
“Many people have gotten rich from cryptocurrency soaring in value this year, but this high-risk asset isn’t for everyone,” Coatsworth noted on Thursday. “It’s volatile, unpredictable and driven by speculation, which doesn’t make investing sleepless at night.”
In short, history shows that you can lose money in crypto as quickly as you have. Long-term price behavior depends on major market conditions. Trading goes on around the clock, every day.
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