If there is anyone familiar with volatility, it’s those who hold cryptocurrencies. Specifically, Bitcoin (BTC -0.97%) has been an absolute rollercoaster ride over the years. Bitcoin prices have fallen over 30% from their high twice, and over 60% once, over the past five years alone!
But you’d be pretty happy if you’d bought five years ago and held on for dear life. A $1,000 investment in Bitcoin five years ago will have grown to over $13,000 today.
So, what’s the lesson here, and how can investors apply it to Bitcoin moving forward?
Here is what you need to know.
Why is Bitcoin so volatile?
Bitcoin and other cryptocurrencies have some similarities with stocks. For starters, their short-term prices result from supply and demand. Prices go up when more people want to buy than sell, and vice versa. But stocks represent underlying companies — tangible businesses. They generate profits,…
