What to know about Bitcoin as it approaches $ 70,000

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Bitcoin is trading near all-time highs: The cryptocurrency broke a record high of $ 68,000 this week before declining slightly. It was the latest record for what can now be considered a tear – the currency also crossed the $ 60,000 threshold in October, a figure it also hit in the spring of 2021.

Money has been pouring into bitcoin lately, according to data released Monday by digital asset manager CoinShares. Bitcoin inflows have reached a record high of $ 6.4 billion so far for 2021, according to data from CoinShares, with $ 2.8 billion poured into bitcoin during the latest bull run of eight weeks of cryptocurrency.

It is not entirely clear what is driving this latest rally, although volatile price swings are relatively common among bitcoin and other cryptocurrencies. Bitcoin is up around 130% year-to-date.

Investing in cryptocurrencies is somewhat controversial among large investors and business leaders. For example, JPMorgan Chase CEO Jamie Dimon is not a fan. “Personally, I think bitcoin is worthless,” he said at an Institute of International Finance event in October.

Conversely, Apple CEO Tim Cook told the New York Times DealBook online summit on Tuesday that he had bought cryptocurrencies. “I think it’s reasonable to own it as part of a diversified portfolio.”

What is bitcoin and should you invest now?

Bitcoin is a decentralized form of payment meant to eliminate the need for intermediaries like banks and governments. Unlike fiat currency (like US dollars in your bank account) which is backed and regulated by the government, bitcoin is powered by a combination of peer-to-peer technology and software cryptography to create a code backed currency. .

Bitcoin is only one of many cryptocurrencies, although it is by far the most important. Other important cryptocurrencies include ethereum and solana. There are also dog-themed cryptocurrencies, including dogecoin and shiba inu, the latter of which saw a massive increase in October 2021, which many attributed to tweets from Tesla CEO Elon Musk. The Shiba inu coin has increased by approximately 72,000,000% in value over the past year at the time of publication.

Cryptocurrencies can be purchased from online cryptocurrency exchanges, such as Coinbase and Gemini, or from certain online brokers, such as SoFi and Robinhood. In addition, some cash and payment apps, including Venmo and CashApp, also offer access to a limited selection of cryptocurrencies.

Whether you should invest in bitcoin and other cryptocurrencies depends on your financial situation. A rule of thumb when it comes to alternative investments like this is to make sure that they only represent a small percentage of your overall portfolio, with the bulk of your investments being diversified through larger assets. traditional, like mutual funds.

The author owned Bitcoin at the time of publication. NerdWallet does not recommend or advise readers to buy or sell bitcoin or any other cryptocurrency.

Sally French writes for NerdWallet. Email: [email protected]. Twitter: @SAFmedia.

The article What to Know About Bitcoin As It Approaches $ 70,000 originally appeared on NerdWallet.

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