Bitcoin at $66,000: A Buy or Hold Analysis

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Bitcoin has reached a new all-time high, but should you buy it now?

Bitcoin (BTC) just reached a new all-time high -- surpassing the $64,863 it hit in April. At time of writing, Bitcoin was trading at $66,650, according to CoinMarketCap data. The reason? The successful launch of the first SEC-approved Bitcoin futures Exchange Traded Fund (ETF) on the New York Stock Exchange.

The ProShares Bitcoin Strategy ETF is one of several Bitcoin futures funds expected to start trading in the coming weeks. It means investors with brokerage accounts can get exposure to crypto without having to buy Bitcoin.

Bitcoin is up almost 4% since yesterday and about 130% since the start of this year. But does that mean now is a good time to buy?

Should I buy Bitcoin?

That's the question you may be asking yourself. As a retail investor, it's almost impossible to time the market and catch the highs and lows. A better approach is to evaluate an investment's fundamentals. Consider how it will perform in the long term and how it fits into your overall portfolio.

In Bitcoin's case, it's difficult to analyze since it's the first asset of its kind and there is still a lot we don't know about how it will develop. Many argue it is a type of digital gold or a store of value, and believe it makes a good hedge against inflation. Others believe Bitcoin -- and cryptocurrency in general -- is a bubble that will eventually burst.

This is why some analysts believe Bitcoin's price could reach $100,000 by the end of the year and others think it will drop to nothing.

If you're considering buying Bitcoin right now, here are some questions to ask yourself:

1. Are you prepared for the volatility?

Cryptocurrency investments are notoriously volatile. Back in April, its value almost halved in about six weeks and it isn't unusual to see it gain or lose 10% in a day. If these price fluctuations are going to keep you up at night, Bitcoin may not be the right investment for you.

Bitcoin's price has increased dramatically since its launch. But that overall increase continues to be a rollercoaster ride and there are many factors that could cause the price to drop again after today's high.

2. Have you done your research?

The best way to guard against panic buying is to fully research any investment before you spend a penny. You don't have to be a technical whizz, but you need to have a solid understanding of what blockchain technology is and how it works.

When you research, you'll also learn more about how cryptocurrency investing differs from buying stock in a company and why it is a higher-risk investment. Plus, you can find out which cryptocurrency exchange may suit you best and get a full understanding of the potential benefits of buying Bitcoin.

3. Are you investing money you need in the short term?

The golden rule of cryptocurrency investing is to only invest money you can afford to lose. People often get worried when they see the price of an asset rise, fearing they might miss out on an opportunity. As a result, they may be tempted to use cash they actually need.

Remember, the price of Bitcoin could fall again next week. If it does, you don't want to be in a position where you're forced to sell at a loss to cover, say, a rent or mortgage payment. If you only invest money you don't need in the near future, it is much easier to wait out any dips.

In a similar vein, make sure your emergency fund is fully stocked before you buy crypto. If you lose your job or face a different financial crisis, it is those emergency savings -- and not your crypto investments -- that will see you through.

4. Are you on top of your other investment goals?

Most financial experts suggest you put no more than 5% of your overall portfolio into cryptocurrency. That way if the bottom does fall out of the market, you'll have other assets to fall back on. Most importantly, before you buy Bitcoin, make sure you're up to date on your retirement savings -- these will tide you through your old age and are more important than a speculative cryptocurrency buy.

The bottom line with buying Bitcoin

It's not a great plan to buy Bitcoin today if you're only doing so because you're scared you'll miss out. Panic buying rarely works out well, and we simply don't know what will happen to Bitcoin's price in the coming weeks.

Bitcoin -- and blockchain technology -- have the potential to disrupt various industries, especially the financial sector. But it has been here for over a decade already and as a long-term investor, I hope it will be here for decades to come. As such, there's no need to rush into an investment before you're ready. Take your time and only buy when you are completely comfortable with the decision you're making.

Buy and sell crypto on an expert picked exchange

There are hundreds of platforms around the world that are waiting to give you access to thousands of cryptocurrencies. And to find the one that's right for you, you'll need to decide what features that matter most to you.

To help you get started, our independent experts have sifted through the options to bring you some of our best cryptocurrency exchanges for 2021. Check out the list here and get started on your crypto journey, today.