The wild swings in the value of Bitcoin and other cryptocurrencies lately should reinforce the idea that they are not sound long-term investments—and that investors should only buy as much as they can afford to lose.
If this sounds overly cautious, consider the recent insights of someone who you might otherwise assume is a true believer in cryptocurrencies: Vitalik Buterin, the co-founder of the cryptocurrency Ethereum. Over the weekend, Buterin sent out a Tweet reminding everyone that “cryptocurrencies are still a new and hyper-volatile asset class.”
Bitcoin, Ethereum, Ripple, and other cryptocurrencies “could drop to near-zero at any time,” Buterin said. Therefore, “Don’t put in more money than you can afford to lose. If you’re trying to figure out where to store your life savings, traditional assets are still your safest bet.”
Over the past 12 months, the value of Bitcoin has skyrocketed from $1,000 to nearly $20,000, before plunging below $6,000 in early 2018. Cryptocurrencies like Litecoin, Ripple, and Ethereum dipped more than 25% in a single day recently.
Like Buterin, Cuban said that Bitcoin and other cryptocurrencies are very risky—and that no one should gambling their life savings on them. “If it’s money you need to depend on and can’t afford to lose, don’t do it,” Cuban said. “If you have money you can gamble with, then it’s worth taking a shot.”