In 2017, Bitcoin became a sensation by rising over 2000% in less than a year. The party was soon over, however, when Bitcoin’s price abruptly dropped to half its previous value. By November 2018, Bitcoin was more than 80% lower than its highest recorded price.
We followed the stunning rise of Bitcoin and predicted it was a bubble about to burst (click here to see original bitcoin articles).
Bitcoin is making headlines again, rising over 300% in 2020.
While we anticipate another sharp decline, you may find it hard to resist the lure of cryptocurrencies. If this is the case, then you can indulge your interest in Bitcoin by following one simple rule: Limit high risk investing to 10% of your portfolio. For example, if you have $2,000 to invest, then cap cryptos at $200.
Keep in mind that all investments should be funded with money you do not need any time soon. The stock market’s significant drop in the first quarter of 2020 is a good reminder that investments can decline quickly. You do not want to take a loss to pay bills or make a down payment on a car or home purchase.
If you live paycheck to paycheck and have credit card debt, do not invest in Bitcoin.
Kristen Jacks is the Founder of Money in Your Twenties. View Kristen Jacks’ bio.