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Bitcoin dropped back below $30,000 Tuesday — the first time it’s gone that low since June 22.
This second drop below $30,000 in the past month follows Bitcoin’s all-time high — above $60,000 — in April, according to Coindesk’s Bitcoin price tracker. It dropped steadily from there and continues to hover around $30,000. We’ve said it before and we’ll say it again: cryptocurrency is a volatile, speculative investment, and you should only invest what you’re willing to lose.
What the Ongoing Volatility Means for Investors
Long-term crypto investors need not panic, says Humphrey Yang, the personal finance expert behind Humphrey Talks.
As always, investors should expect this kind of volatility with crypto, which can be attributed to the newness of the market, according to Ollie Leech, learn editor at Coindesk, a leading crypto news outlet. That’s why experts recommend keeping your cryptocurrency investment to less than 5% of your portfolio.
It’s also why you should only ever put in what you’re OK with losing.
“It’s a highly speculative asset which carries high risk with no income-producing properties,” says Nate Nieri, a CFP and the founder of Modern Money Management. “That does not mean those that want to hit a home run can’t get lucky. If an investor wants to place a small, high-risk bet in crypto and wouldn’t mind if that money burned up overnight, then I don’t see anything wrong with allocating a small percentage toward it.”
But one thing is for sure: traditional long-term investment advice stands. The best way to avoid stressing over your investments is to “set it and forget it.”
“Don’t check on it. That’s the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision,” Yang says.