Many made a killing on investing in bitcoin after the prices of the digital asset started doubling in mid 2020, and reached an all time high of $63K in early 2021. Although the prices of BTC started slipping a few months thereafter, the price has been picking up in recent weeks and is now nearing the S63K all-time high price index. People who have saved some extra money during the pandemic lockdown are now contemplating on buying bitcoin instead of letting their extra money parked in a low-yielding savings deposit.

While this may seem like a good idea for those looking to invest their money in high yield investments, have awarenes that putting your money on cryptocurrencies if for the purpose of investing is a form of speculative investment involving currency that is not backed by any form of physical asset of value like gold. Neither is the price of bitcoin linked to a specific fiat money like the U.S. dollar.

What Makes Speculative Investments Risky?

Speculative investments, while high yielding involves a high level of risk that is best only for people with high tolerance for risks. This means that even if the speculated investment does not turn out as expected, or at worst results in substantial losses, the investor still has sufficient financial fallback to rely on,

Purchasers of a speculative investment like bitcoin has to focus closely on price fluctuations, since high yields can be attained by taking advantage of the market value changes. The changes however is associated with the supply and demand of the commodity. An increased demand with relatively low supply can cause the market value to rise. Conversely, if the supply exceeds the demand, there’s a ;ile;y possibility for the market value of the commodity to frop/

The supply of bitcoin can be affected by the willingness of bitcoin holders to sell their digital coin at the current market price and by the speed by which miners can earn bitcoins from successfully solving the equations of blockchain transactions. How bitcoin miners earn BTCs that will add to the available supply of the cryptocurrency in the market is another story that one needs to comprehend before deciding on any type of cryptocurrency speculative investment.

While the most important feature of digital coins like bitcoin is its capability to work quickly amidst a digital environment without having to use the services of traditional financial institutions, there is more to understand about bitcoins before one makes a final decision to place hard-earned money, even on the fastest moving cryptocurrency like bitcoin.

Bitcoins and other digital coins work in an unregulated environment, in which there is no government agency in charge of overseeing operators of crypto-exchange sites and investment platforms. bitcoins unregulated by governments or central banks.

Why Investing on Mutual Funds is a Better Option

If you’re looking to invest money you have saved for a future use, your best option is to invest it in a mutual fund managed by reputable asset managers. Here, your money will become part of a pooled fund invested on a portfolio of holdings in the form of securities, bonds or some form of short-term investments with guaranteed returns,

There are mutual fund managers who offer mutual fund work with their clients in customizing their investment. Options presented are in accordance with an individual;s tolerance for risk and the time horizon or the expected period the saved money will be used,