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Bitcoin warning as price volatility tipped to ‘go all over the place'

Daily Express logo Daily Express 18/05/2021 Martina Bet
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Bitcoin fell to its lowest price since February after Tesla CEO Elon Musk implied that his company may sell its cryptocurrency holdings. The business magnate appeared to agree with a post on Twitter that said Tesla should divest its stake in the largest cryptocurrency, which at one point was worth $1.5bn (£1bn). Mr Musk later followed up on the Tweet, saying: "To clarify speculation, Tesla has not sold any Bitcoin."

Bitcoin fell by almost a tenth to below $45,000 (£31,340) for the first time in nearly three months, before paring some losses to trade just below $46,000 (£32,600).

It comes less than a week after Mr Musk knocked nearly $10,000 (£7,085) off the price of the cryptocurrency after he announced that Tesla had stopped accepting Bitcoin as payment for its cars due to concerns about its carbon emissions.

According to many financial experts, Bitcoin's latest slump shows why people should be cautious before investing in cryptocurrency.

In an exclusive interview with Express.co.uk, Martin Bamford, chartered financial planner at Informed Choice, warned against it, saying: "[Bitcoin] is not an investment.

"It is purely speculative and it is something that doesn't have any intrinsic value.

"It's just based on whether or not someone is prepared to pay a higher price for what you owe.

ctp_video, bitcoin, bitcoin news, elon musk, tesla, tesla news, © MARTIN BAMFORD / GETTY ctp_video, bitcoin, bitcoin news, elon musk, tesla, tesla news, Elon Musk in a blue shirt: ctp_video, bitcoin, bitcoin news, elon musk, tesla, tesla news, © GETTY ctp_video, bitcoin, bitcoin news, elon musk, tesla, tesla news,

"The problem with Bitcoin is also that it tries to do too many things at once.

"Some people treat it as a store of value, like gold. Others treat it as a currency and others as an investment.

"Unless it picks one function, it is likely to continue with this price volatility going all over the place."

When asked about Tesla's investment in the cryptocurrency, Mr Bamford said: "It is fascinating...

"They made more money from Bitcoin than selling cars.

"But again it was a speculative move.

"It could have gone either way, it is a speculation.

"It could have quite easily dropped in that time by a large amount."

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Martin Bamford looking at the camera: Financial adviser Martin Bamford © MARTIN BAMFORD Financial adviser Martin Bamford ctp_video, bitcoin, bitcoin news, elon musk, tesla, tesla news, © GETTY ctp_video, bitcoin, bitcoin news, elon musk, tesla, tesla news,

David Yermack, a professor of finance at New York University Stern School of Business, echoed Mr Bamford's comments and told CNBC: "The only thing I can expect for sure is volatility.

"From day one, this has been a risky investment for people.

"It's a purely speculative asset.

"You should never invest in anything that you don't understand."

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a close up of a sign: autoplay_video, bitcoin, bitcoin news, elon musk, tesla, tesla news, cryptocurrencies, dogecoin, cyrptocoin, © GETTY autoplay_video, bitcoin, bitcoin news, elon musk, tesla, tesla news, cryptocurrencies, dogecoin, cyrptocoin,

Financial experts generally advise that people looking to invest in Bitcoin allocate a small amount of their portfolio that they would be okay with losing entirely.

The UK's Financial Conduct Authority just issued a similar warning.

Daniel Polotsky, CEO of CoinFlip, one of the largest bitcoin ATM companies in the US, said: "People should only invest really what they're willing to lose.

"Maybe there are opportunities to make money because it's so volatile, but it can get very addicting very quickly to start trading back and forth.

"And, most of the people that do that lose money."

Express.co.uk does not give financial advice. The journalists who worked on this article do not own Bitcoin.

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