On Tuesday morning, Bitcoin briefly reached an all-time high of $69,210, according to Coin Metrics. It fell later that afternoon, but was hovering around $66,400 as of 5pm on Wednesday.
The new record has been a long time coming: it has been more than two years since the cryptocurrency reached its previous high of around $68,982 on November 10, 2021.
One factor that appears to be fueling Bitcoin's recent rise is the emergence of Bitcoin ETFs. In January, the SEC approved 11 Bitcoin ETFs, allowing investors to purchase Bitcoin ETFs through their brokerage accounts and gain exposure to the cryptocurrency without having to buy and store it themselves or through a cryptocurrency exchange.
The digital token's rise also helped boost the prices of other virtual currencies, including ether, which reached its highest price level since January 2022 on Wednesday.
Although Bitcoin's recent success may make it tempting to buy, think carefully before adding it or any other cryptocurrency to your investment portfolio. this is the reason.
Unlike stocks and bonds, cryptocurrencies do not derive their value from an underlying entity, which is why they can be subject to erratic ups and downs.
“There's no actual business or commodity of any kind that supports this other than supply and demand and what people are willing to pay for it,” Douglas Boneparth, certified financial planner and president and founder of Bone Fide Wealth, tells CNBC Make It. . Boneparth invests in Bitcoin and other cryptocurrencies.
He says the volatile nature of cryptocurrencies can be “troubling” for new investors.
“If they're not used to it, it might prompt them to bail,” Boneparth says. “This is something that if you believe in and have conviction, you will have to hold on to it for a long period of time.”
Even if you can tolerate volatility, it's smart to tread carefully if you're considering buying cryptocurrencies.
This starts with understanding that both the Bitcoin market and cryptocurrencies in general have taken significant hits over the past couple of years. Bitcoin lost more than 60% of its value in 2022, just one year after reaching its previous record high. The cryptocurrency market lost more than $2 trillion in value in the same year.
Although Bitcoin's value has increased by about 45% year to date, as with any financial asset, its current performance should not be used to predict how it will behave in the future.
Due to the unpredictability of cryptocurrencies, financial experts advise against investing more money in cryptocurrencies than you are willing to lose.
Do you want to get your dream job in 2024? Takes CNBC's new online course on how to ace your job interview To learn what hiring managers are really looking for, body language techniques, what to say and what not to say, and the best way to talk about pay. CNBC Make It readers can save 25% by using discount code 25OFF.
Plus, Sign up for the CNBC Make It newsletter For tips and tricks for success in business, money and life.
