Considering the Trump Bitcoin Surge: What You Need to Know
The price of bitcoin has been making headlines lately, breaking the $100,000 mark for the first time. This surge in value is partly attributed to Donald Trump’s newfound support for cryptocurrencies, causing many ordinary investors to take notice. In fact, one in eight adults in the UK now own cryptocurrency, with an average holding of £1,842 according to research by YouGov and the FCA.
While stories of investors striking it rich on bitcoin may sound appealing, it’s important to remember that cryptocurrencies are incredibly volatile and largely unregulated. The FCA warns that investors should be prepared to lose all of their money when dabbling in this market, as there is very little consumer protection.
If you’re considering jumping on the bitcoin bandwagon, there are a few things you should keep in mind. The first step is figuring out how to buy it. In the past, purchasing bitcoin was a complex process, but nowadays platforms like Coinbase, Gemini, and Revolut make it easy to trade cryptocurrencies. Setting up an account typically involves sharing personal information and proof of ID, so be prepared for that.
It’s also worth noting that the cryptocurrency market is not regulated in the UK, meaning that investors have very limited recourse if things go south. To minimize your risk, it’s advisable to trade with a company that is regulated by the FCA or listed on its register of cryptoasset firms.
It’s also essential to remember that investing in bitcoin is not the same as investing in traditional assets. Bitcoin’s value is primarily driven by speculation and demand, rather than tangible assets or cash flow. As a result, the market is incredibly volatile, and investors should be prepared for drastic price fluctuations.
While it may be tempting to try your hand at bitcoin investing, experts caution against going all in. Laith Khalaf from AJ Bell recommends keeping cryptocurrency holdings to no more than 1-2% of your overall portfolio, as the hype surrounding bitcoin can lead to volatile price swings.
Ultimately, the decision to invest in bitcoin rests with you. Just remember that while the potential for high returns is there, so is the risk of losing it all. So, if you’re thinking about putting your money into bitcoin, proceed with caution and be well-informed about the risks involved.
