The recent tear-up in the Bitcoin price is showing no signs of relenting. Earlier today, prices of the digital asset soared to its highest since December 2017 around $18,460. Light profit-taking has forced Bitcoin back from those three-year peaks but it remains within striking distance of current record highs north of $19,700.
The cryptocurrency has been a star performer in 2020. It’s rocketed 150{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b} since January 1 as investors have increasingly see it as a terrific ‘safe haven’ for these uncertain times. And some analysts reckon Bitcoin prices have much further to run. Analyst Simon Peters of investment platform eToro reckons values could hit $20,000 before Christmas.
Will Bitcoin sink or soar?
Sure, Bitcoin might be ripping it up right now, causing investors to pile in ever-greater numbers. But the currency’s capacity to spring higher on a sixpence is what makes it such a dangerous investment in my opinion. I’d much rather use my cash to buy UK shares today.
For one, I’m not convinced that Bitcoin’s rise on flight-to-safety grounds is built on solid foundations. As analyst Shane Oliver of AMP Capital comments:
“[Bitcoin’s] huge volatility hardly makes it a safe haven as a store of value. I have far more confidence in the $50 note in my wallet retaining its value over time than Bitcoin, which seems to bounce around like a yo-yo.”
Investors in Bitcoin today need to recall how the cryptocurrency crashed after reaching those record peaks three years ago. It slumped around 25{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b} just a week after hitting those all-time highs. And it had more than halved in value within just six weeks.
I don’t see any reason why Bitcoin couldn’t sink again following 2020’s stratospheric gains. Questions over its role as a safe haven aren’t the only reason I think a correction could occur. Eternal doubts over the intrinsic value of Bitcoin also threaten to send prices south again.
Getting rich with UK shares
As I say, I won’t be taking a risk with Bitcoin any time soon. It’s impossible to say where crypto prices will be five weeks from now, let alone what level they’ll be at in five years. I’d much rather continue investing in UK shares. And particularly so after the 2020 stock market crash.
The average yearly return for long-term UK share investors comes in at at least 8{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b}. This means that someone like me who invests £500 a month can expect to make a whopping £704,275 after 30 years.
It’s possible that Bitcoin could be worth 10 times that amount in three decades. Or it could end up being worth zero. I’m not prepared to risk the chance of retiring in luxury on that £704-odd-thousand by gambling on cryptocurrency markets.
Besides, investing in UK shares after the 2020 stock market crash offers the chance to beat that 8{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b} average annual return. I can buy quality shares in my Stocks and Shares ISA that’ll rocket in value as the economic recovery takes on. And there are stacks and stacks of top-class stocks for me to select from to supercharge my long-term returns too.
More reading
- Dividends! One huge reason I’m considering buying the FTSE 100
- These ‘boring’ cheap shares have rocketed 40{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b} in three weeks. Would I buy today?
- 2 FTSE 100 dividend shares I’d buy for my Stocks and Shares ISA in this market rally
- Forget cash! I’d buy this FTSE 100 stock in an ISA for its 6{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b} yield
- Cheap shares: I’d buy stock in this great British business today!
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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