Here’s how much you’d get if you invested $1,000 in bitcoin this year

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People walk through the North American Bitcoin Conference held at the James L Knight Center on January 18, 2022 in Miami, Florida.

Joe Raedle | Getty Images

Bitcoin has had a tough start to 2022.

The major cryptocurrency fell below $33,000 on Monday to its lowest level since July, before regaining some losses later in the day.

Still, the digital asset is down about 22% year-to-date, and about 40% below its all-time high from November.

This means that an investor who put $1,000 into bitcoin at the start of the year would have around $780 in their account right now after just a few weeks of holding the volatile asset.

While such drops can be scary, they also offer people the chance to review their financial plans and buy more cryptocurrency if it makes sense for them, said Tyrone Ross, CEO of Onramp Invest, a crypto-asset platform for financial advisors and businesses.

“When something is on sale and you like it, you should buy it,” he said.

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Room to grow

Even though bitcoin has struggled to make meaningful gains, bulls say the currency has plenty of room for growth this year.

“I think [bitcoin is] will hit $100,000 this year, probably around the middle,” Antoni Trenchev, co-founder and managing partner of cryptocurrency lending platform Nexo, told CNBC’s “Street Signs Asia” on Monday.

Other experts have made similar predictions. Matt Hougan, chief investment officer of Bitwise Asset Management, in an October interview with Bloomberg TV, said bitcoin could hit the $100,000 mark in 2022.

Goldman Sachs analysts wrote in a recent note that the company could see bitcoin take market share from gold and hit that key threshold.

In addition to potential price action, cryptocurrencies have become an increasingly integrated and accepted form of payment.

“I think we are not at mass adoption yet, but we are at mass acceptance,” Ross said, adding that for those who have done their research and decided that crypto is right for them, this is the good time to jump into the investment.

Time in the market matters

To be sure, you shouldn’t rush into an investment just because it’s relatively cheap, experts say.

If buying crypto doesn’t align with your long-term financial goals, you shouldn’t buy it just because it’s trading at a relative discount, according to Ivory Johnson, certified financial planner and founder of Delancey Wealth Management at Washington, DC.

“If your time horizon is 10 years, I think now is a good time to buy it,” he said. Otherwise, he recommends investors take a more holistic approach to the asset class instead of trying to time a volatile market.

Investors should have a clear reason to buy crypto instead of being lured in just because the price has fallen, he said. Reasons include viewing the asset as a store of value, viewing it as uncorrelated, or wanting to own it due to the growing adoption rate.

Before jumping in, people should be aware of how much of their total portfolio is invested in cryptocurrencies and make sure the allocation matches their risk profile, Johnson said. New investors should have a clear idea of ​​how much they are willing to risk before buying.

“If you put 20% into crypto and you can’t handle the volatility, you have what’s called a problem,” he said. “But if you’ve gone to 1%, 2% or 3%, it’s not a big blow to your wallet.”

While you are investing

Investors should expect cryptocurrencies to continue to be volatile. The historically risky asset has not been tested in an environment like the one we are experiencing today, where interest rates are expected to rise, according to Ross and Johnson.

“You should expect that [crypto] going to drop further, so only invest what you can afford to lose,” Ross said. “If we get up tomorrow and it drops to zero, you should be able to keep paying your rent.”

Before putting money into crypto, both experts stressed the importance of having a secure personal financial situation and a clear investment plan.

“If you average the dollar cost down and up, it will dampen that volatility and also improve returns,” Ross said.

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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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