Despite war in Ukraine, rising interest rates and the soaring price of oil, major cryptocurrencies such as Bitcoin have remained relatively stable this year.
Bitcoin, the biggest cryptocurrency, is currently worth £31,000 ($41,000) a coin and has been steady since the start of the year, when prices fell from a high of more than £45,000.
Depending on your appetite for risk, and whether you are buying a long-term asset or want to dip your toes into crypto, the relative stability of Bitcoin is either good news or bad.
So, should you buy some Bitcoin and when should you buy it?
Should you buy Bitcoin?
Bitcoin has not convinced everyone yet. There are many out there who will advise staying well clear of the asset.
Warren Buffet, the “sage of Omaha” and someone who is widely seen as one of the greatest investors ever, famously described Bitcoin as “rat poison”.
Buffet’s opinion on Bitcoin is unlikely to have changed in recent years. However, his holding company Berkshire Hathaway recently invested $1bn into Nubank – a bank specialising in crypto assets, suggesting a softened approach from the investor.
Whether you are a naysayer or an enthusiast, it is becoming more and more commonplace for investors to dedicate a percentage of their portfolio to crypto assets.
‘Bitcoin could fall to zero’
The Financial Conduct Authority, the City regulator, warned that people buying Bitcoin did not understand it and it was extremely risky as prices could fall to zero.
It found that only 58pc of people believed they had a good understanding of how cryptocurrencies worked and warned investors betting on the cryptocurrency to be “prepared to lose all their money”.
The watchdog highlighted the lack of protection for investors as cryptocurrencies were unlikely to be covered by the Financial Ombudsman Service and Financial Services Compensation Scheme. The FCA also warned investors to be alert to scams.
Pimfa, a trade body for the wealth managers, said crypto was extremely high risk. Tim Fasson, of Pimfa, said: “For some people desperate for a quick and easy solution to their own financial turmoil, cryptocurrencies might look attractive. But they are extremely high-risk and highly-volatile investments that only the most sophisticated of investors should consider.”
