Bitcoin Mania

My brother, my personal trainer, and a good friend all invested in Bitcoin this week. And it’s only Wednesday.

If you are a twentysomething lured to high-risk investing by Bitcoin then please consider these suggestions before you send any more money to Coinbase.

First, only use money you can lose.

Bitcoin is a bubble. If this is your first bubble then please review the following bubble characteristics outlined by Investopedia:  “A bubble is an economic cycle characterized by rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior. When no more investors are willing to buy at the elevated price, a massive selloff occurs, causing the bubble to deflate.”

Make sure you equate “massive selloff” with a loss of 50-90%.

Second, think of bitcoin as entertainment, and limit your exposure to your entertainment budget. Only invest an amount equivalent to going to a concert, football game or ski weekend.

Third, if you live paycheck to paycheck and have credit card debt, do not invest in Bitcoin.

Finally, if you have already invested more than you should – SELL!

Bitcoin, like bubbles before it, entices people because it captures headlines and promises easy money. Learning to handle bubbles is a skill. Hopefully you are able to learn without getting burned.

Kristen Jacks is the Founder of Money in Your Twenties