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The Bitcoin Bubble

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In this blog post, Elliott Parkhouse, Senior Financial Planner at Guardian Wealth Management reviews the Bitcoin phenomenon and explains why investors should approach with caution.

In the past month the value of Bitcoin has fallen by 50%, while other cryptocurrencies such as Longfin are down around 10-15%. This drop in value comes as countries around the world take a firmer stance against trading in cryptocurrencies, with South Korea introducing a ban on anonymous crypto-trading and India suspending the accounts of cryptocurrency investors.

Discussing this relatively new market, Elliott Parkhouse, Senior Financial Planner at Guardian Wealth Management said;

“It’s no secret that cryptocurrencies are a very volatile market but with countries such as China and India making statement moves and even fining some investments on tax evasion, it is causing the entire industry to re-evaluate,”

“As a financial adviser, investing in cryptocurrencies is not something we recommend to our clients because, at the moment, it is an unregulated market and clients can lose money as quickly as they make money.”

Earlier this year Bitcoin traded at below US$10,000 down from its December high of $20,000, with experts issuing fresh warnings about the volatility of the currency and the possibility of yet more crashes to come.
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The popularity of Bitcoin and fluctuations in its stability has led to rumours that new and stringent regulations are due to be announced by Central Banks at the next G20 summit, to be held in March. If implemented these new rules could, in theory, make for a more secure future for cryptocurrencies.

However, what impact any new regulations would have on the value and appeal of Bitcoin and cryptocurrency as a whole remains to be seen.

Cryptocurrencies and the underlying blockchain technology definitely have a future in modern society and are extremely useful for the exchange of information and goods, however until the market is regulated they should be approached with caution.

Putting money in is a gamble. If it does well you could double or treble your income, but just as easily if it goes badly you could lose everything. Without knowing the facts, past performance is no indication of future performance.

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About Elliott Parkhouse:

Elliott provides independent, holistic financial planning and advice to enable UK expats and international investors to effectively manage their finances and achieve their medium to long term goals.

"Virtual currencies such as Bitcoin aren’t the easiest thing to invest in, you need to buy them safely. So, like with anything, do your own research and make an educated decision that way. You need to understand how it works, if it is liquid, then decide what you are willing to risk."
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