When something takes off like Bitcoin has, it creates a bubble. And, just as we have seen with technology and the housing market, bubbles are bound to burst. The trick is figuring out when the bubble will burst and getting out before this happens. Unfortunately, no one knows when the Bitcoin bubble will go from lucrative to bust. Some believe it is bound to happen any day while others give it a year or more to continue to grow.
A Risky Gamble
One of the riskiest aspects of investing in commodities like Bitcoin is that you are betting on appreciation. The only way you can make money on Bitcoin is if the price continues to rise. This differs from investing in other areas like real estate or bonds. These have actual value and provide the opportunity to generate cash. Bitcoins have no inherent value as bonds and property do. That means that if the prices were to crash, you would have nothing to show for your investment.