In five years, Bitcoin's value has risen by about 175%. But with a staggering market cap of almost $1.9 trillion, which is far higher than the next largest cryptocurrency (Ethereum at $381 million), investors may be wondering if it has become too expensive. And as investors grow concerned about rising valuations, there could be room for even more of a pullback in Bitcoin's price this year.
Although there are some outlandish and overly bullish forecasts for Bitcoin eventually rising to more than $1 million, it can be dangerous to rely on such assumptions. At the end of the day, this is an entirely speculative investment with no competitive moat. Bitcoin is simply the most popular cryptocurrency in the world today, but that doesn't mean that it will always be the case.
There's a ton of risk with Bitcoin, especially given its high valuation, and I don't think it will end up bouncing back to its previous highs this year. Although it's generated some impressive gains over the years, many investors have also been burned due to its wild swings and volatility. The safer option may be to simply invest in growth stocks rather than take a chance on such a highly unpredictable investment as Bitcoin.
