The recent drop in Bitcoin has caused concern about the volatile product but experts believe it is still on an upwards trend.
Recent crashes into cryptocurrency have more people interested in investing in the volatile market but one expert says don’t expect a rapid return on your spending.
Bitcoin, one of the largest and most popular cryptocurrencies, has been dropping in price for the last few weeks. The latest $10,000 crash has been seen as a minor fluctuation for the currency.
The price drop has been put down to a range of factors including the US Securities and Exchange Commission’s rejection of a spot Bitcoin exchange-traded fund and China’s clampdown on Bitcoin mining.
Finder personal finance expert Kate Browne told news.com.au the coins are still on an upward trend.
“Investing in cryptocurrency has high highs and low lows, we often see the market fluctuate. For Bitcoin it has gone from $89,000 to $79,000,” she said.
“Overall it is still trending upwards. It is worth noting that in 2015 one Bitcoin was worth over $400,000. If you take that into consideration the $10,000 drop is not a huge amount.”
Ms Browne said those interested in cryptocurrency should consider dollar-cost averaging with their investments.
It is a popular strategy used to mitigate the risk of market volatility.
The scheme involves purchasing a set amount of an asset at a regular interval, regardless of the price or market conditions.
An example of this would be if you set up a recurring order that purchased $100 worth of Bitcoin at the start of every month.
It comes as The Reserve Bank of Australia has warned crypto investors they risk holding speculative assets with “niche” uses that could lose most of their value.
The RBA’s head of payments, Tony Richards, said the value of many cryptocurrencies, which have surged to $US2.6 trillion, had been driven by “fads and a fear of missing out” and could crash when central banks decide to assert control over their monetary systems.
“I think there are plausible scenarios where a range of factors could come together to significantly challenge the current fervour for cryptocurrencies so that the current speculative demand could begin to reverse, and much of the price increases of recent years could be unwound,” he told the Australian Corporate Treasury Association, according to the AFR.
Crypto has been notoriously volatile and analysts said it is too early to tell whether the latest dip marks the start of a reversal of the sharply rising market or whether it is just a correction on the way to new all-time highs.
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