Bitcoin’s price has been particularly volatile as of late.
The coin both rose and fell this week, at one point dropping by about 7% in a single hour alone. It has since bounced back somewhat, hovering near $57,000 as of Thursday morning, but that’s still down from a $71,000 peak in June.
These recent movements in bitcoin’s price serve as a stark reminder of how erratic the cryptocurrency can be and why financial planners often consider it a discretionary investment.
Although bitcoin’s price has roughly doubled in value since August 2023, it’s not an appropriate investment for everyone, especially those with a lower risk tolerance. Bitcoin’s frequent price fluctuations undermine its reliability as a store of value or as a hedge against inflation, at least in the short term.
And without wider acceptance of bitcoin as a currency, its value seems to largely hinge on speculation and market sentiment, rather than intrinsic value. This makes it a risky asset compared with other investments, like stocks or bonds, which …