Bitcoin is cratering again, showing why people should be cautious before investing in cryptocurrency – CNBC

Bitcoin is cratering again, showing why people should be cautious before investing in cryptocurrency – CNBC

In this photo illustration, a visual representation of the digital Cryptocurrency, Bitcoin is on display in front of the Bitcoin course’s graph on February 09, 2021 in Paris, France.

Chesnot | Getty Images

Bitcoin‘s roller-coaster ride has continued, flashing a warning sign for curious investors who may be interested in putting money in the highly speculative cryptocurrency.

The digital asset soared to a fresh all-time high, nearing $58,000 per coin on Sunday, according to data from Coin Metrics. But on Monday, the rally reversed after a slew of criticism from high-profile players.

First, Tesla CEO Elon Musk tweeted over the weekend that the price of bitcoin seemed high just as the currency surpassed a $1 trillion market value. Then, on Monday, Treasury Secretary Janet Yellen said that bitcoin is an “extremely inefficient way of conducting transactions.”

That spurred a slump, sending bitcoin down more than 10% on Monday. On Tuesday, the fall continued, with the currency sliding another 10% to about $48,000.

Financial experts generally advise that people looking to invest in bitcoin allocate just a small amount of their portfolio. The U.K.’s Financial Conduct Authority just issued a similar warning.

“People should only invest really what they’re willing to lose,” said Daniel Polotsky, CEO of CoinFlip, one of the largest bitcoin ATM companies in the U.S.

He added that people near retirement, those who will need the money near term or people who are looking to
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