The Bitcoin price hits all-time highs! Should I sell stocks and buy it for 2021?
The Bitcoin price hits all-time highs! Should I sell stocks and buy it for 2021? Jonathan Smith | Friday, 18th December, 2020 I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. 2020 has been a crazy year for so many reasons. For traditional investors like myself, the moves in financial markets have been slightly puzzling at some stages of the year. One of these has been the movements in the Bitcoin price relative to other markets.For example, during the stock market sell-off in March, I thought Bitcoin would appreciate in value as an alternative investment. This, in the same way that gold rallies during uncertainty. Bitcoin and gold don’t pay any interest or dividends, but you could buy it as a store of value. The opposite happened, in fact, and the Bitcoin price fell below $5,000. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Over the past couple of months, the FTSE 100 has recovered some of the losses from this year, but still sits down around 1,000 points from earlier this year. Conversely, the Bitcoin price has made new all-time highs, trading above $23,000 as I write. Clearly, there’s no particular correlation between Bitcoin and stocks. This makes it hard to compare the two at an absolute level.Stocks vs Bitcoin risk appetiteI would classify myself as having a medium-to-high risk tolerance when it comes to investing. This means that I’m happy to hold FTSE 100 growth stocks that potentially are losing money at the moment, with the hope of future returns. It also means that I’m happy to buy a stock that is out of favour with investors, as a contrarian buy.Ultimately, there’s still a huge divide between the acceptance of taking those kind of investing risks and the risk of buying Bitcoin. A FTSE 100 growth stock has a fundamental value (we call this the enterprise value). The business will own tangible assets, sell a tangible product, and generate tangible cash flow. To the best of my knowledge, nobody knows what the actual value of a Bitcoin is, or the price it should be. This makes it risky to invest in as you don’t know exactly what you’re getting for your money.Another element of the risk scale is the volatility. FTSE 100 stocks have been volatile this year, unusually so. Yet this still doesn’t compare to the day swings on Bitcoin. For example, I looked at the Bitcoin price action over the past 24 hours. Overall, the price was up 17%, a large move. There were short periods when sharp sell-offs happened. During a half-hour period, the price dropped 4.4%. It then bounced back. Investing time frameThe final reason I won’t be selling my stocks to buy Bitcoin right now is because of my time horizon when investing. Although occasionally I do buy and sell over a short time period, I’m invested with a time frame of several decades. I genuinely don’t know whether Bitcoin will still be around in decades to come. I do accept that people (and I have friends among them) have made a huge amount of profit from Bitcoin price movements in 2020. I’m happy for them, and would even buy a small amount of it myself with some spare change. But as for the vast bulk of my investment funds, I’m sticking to what I know: stocks! 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