Can Bitcoin definitely help you achieve financial objectives?

The price of Bitcoin once again took a dive early this week after rising to an all-time high of $7 598 this weekend. This follows the previous price roller-coaster of the cryptocurrency in September, fuelled largely by increased regulator scrutiny.

While it may be tempting to buy into the evolving cryptocurrency hype, some investors – particularly those who don’t have all the facts – may be getting ahead of themselves. Bitcoin only dates back to 2009, making it a very young and enigmatic asset class. New asset classes of this nature, regardless of their potential for speculative short-term return, are volatile and carry a high degree of risk.

A significant portion of the risk is due to the largely uncertain standpoint being taken by legislators and regulators. The legality of cryptocurrencies varies from country to country. It appears regulators worldwide are struggling to control Bitcoin’s exponential growth.

As such, more countries have begun to tighten their cryptocurrency regulations, with some even banning the trading of Bitcoin and other virtual currencies altogether.

The high level of uncertainty surrounding Bitcoin’s explosive growth highlights the benefits of sticking to a sound investment strategy and not necessarily buying into the latest hype. It’s essential to use an investment solution that’s been proven to achieve financial objectives.

Elize Botha is MD of Old Mutual Unit Trusts