Answer These 5 Questions Before Investing in Bitcoin – Motley Fool

Answer These 5 Questions Before Investing in Bitcoin – Motley Fool

These days, a growing number of people are taking the plunge and investing in cryptocurrencies. And while there are many digital currencies worth exploring, Bitcoin (CRYPTO:BTC) remains among the most popular. In fact, you may be thinking of putting some money into Bitcoin yourself. But before you do, make sure to address these key questions.

1. What’s your motivation?

It’s one thing to buy Bitcoin if you feel that it aligns with your overall investment strategy. Or, you may feel that adding it to your portfolio will provide you with some asset diversification, especially if, at this point, you’re only invested in stocks. But if you’re going to buy any cryptocurrency, you should have a specific reason for doing so. This shouldn’t be one of those situations where you plunge into an investment because you keep hearing that other people are doing it.

Blue Bitcoin logo on graphic screen

Image source: Getty Images.

2. Do you understand the risks involved?

Like all cryptocurrencies, Bitcoin’s price can be very volatile. And while the same can be true of stocks, Bitcoin may be more easily influenced by individual movers and shakers than the shares of well-established companies. Recently, Tesla Source…