Its rapid rise has been remarkable — or insane, depending on your appetite for risk. But there’s some logic to the run-up: Investors are pouring money into bitcoin and other cryptocurrencies during the Covid-19 pandemic as the Federal Reserve sent interest rates near zero (and expects to keep them there for several more years), severely weakening the US dollar.
That makes bitcoin, comparatively, an attractive currency. There’s a set limit to the number of bitcoins on the planet, and investors believe that once the supply runs out, the digital coin’s value can only increase.
Anhony Scaramucci, Skybridge Capital’s founder, has a big stake in bitcoin, but even he says people need to watch out. He told CNN Business earlier this month that it could be a solid addition to the average investor’s portfolio — but you’ve got to have the stomach for it.
“This thing has a tendency to crash up,” he said. “It is due for a correction, and these corrections can be violent.”
Scaramucci said bitcoin could suddenly tumble 20% to 50%.
“You have to be very cautious,” he added.
“Bitcoin’s best days are ahead of it, but it’s going to be volatile and I think people need to be prepared for it,” Scaramucci told CNN Business.