What Are the Pitfalls of Investing in Cryptocurrency?
Volatile markets, no regulation, and a host of sketchy financial products make investing in cryptocurrency a little like playing the lottery By Todd Feathers
The Discord servers and subreddits are a frenzy of graphs, memes, and speculation about the next bull market. Twitter CEO Jack Dorsey said he believes bitcoin can bring about “world peace.” And the pro-Trump “magacoin” was launched for more than 1,000 early adopters whose personal information was quickly exposed online due to poor website security. (The organizers did not respond to a request for comment.)
The value of digital currencies fluctuates wildly at the whim of erratic billionaires, rumors, and the machinations of unregulated online exchanges. During the last year, the overall cryptocurrency market capitalization has swung from $293.1 billion in July 2020 up to a record high of $2.5 trillion in May 2021 and then down to $1.5 trillion as of late July, according to CoinMarketCap, a crypto data platform.
Reliable numbers are hard to come by, but industry surveys estimate that anywhere from 8 to 14 percent of Americans own cryptocurrency. And over the last year alone significantly more professional financial advisers say they are encouraging clients to invest in digital currencies, according to an annual survey by the Financial Planning Association.
