Don't get irrational over bitcoin, expert warns
Online currency exploded from $2,800 US per coin to $20,000 US in just 4 months
If you were one of those who invested early in bitcoin, you're a lot richer than you were a few weeks ago.
The online cryptocurrency has exploded recently, jumping from about $2,800 US per coin to $20,000 US in a matter of four months.
I said when it reaches 20,000 I'm going to cash out and move to Los Angeles.- Krista Hickey, bitcoin buyer
Bitcoin is the world's first decentralized digital currency, meaning buyers hold the online money in their own computers, without a central bank or an administrator.
Krista Hickey bought 1.3 bitcoins back in August — an investment of about $4,000 Cdn. When she checked after the surge, her shares were at $24,000.
"It's essentially just gone up since then. It's crazy," she told CBC Radio's Ottawa Morning on Thursday. "I said when it reaches 20,000 I'm going to cash out and move to Los Angeles."
But with insane market surges comes risk, and Hickey still hasn't cashed out like she said she would. Now she said her friends are all trying to gauge the trend to see if it's worth it to ride out the peaks and valleys.
Don't get 'irrational'
The 1,500 per cent increase over the last year has buyers anxious over whether to sell or invest more.
"This is a new technology, there's a lot of risk involved," said Moe Adham, the co-founder of a bitcoin ATM company in Ottawa. "It's a little bit like a gold rush."
The surge in value has left the technology sector wondering if the bubble will burst.
"It was a very emotional day, it's been a crazy week," Adham said.
Popularity drives the price up, but as the coins become more valuable people get tempted to sell and cash in on their investment. If everyone sells at once, the stock crashes.
"Fear of missing out is really a tough feeling to go through," Adham said.
But he had a warning for consumers: don't invest your life savings without doing research, and don't sell in a frenzy.
"I would like people not to become irrational," he said.
With files from CBC Radio's Ottawa Morning