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Boris Schlossberg, a foreign exchange strategist at BK Asset Management, has warned investors that bitcoin’s price decline has lured many people to mistakenly think the price decline represents a good buying opportunity.
Schlossberg warns people not to fall victim to what he considers a false hope, according to CNBC. Bitcoin suffered once of its most dramatic falls on Friday, dropping as low as $10,400 and causing Coinbase to temporarily halt bitcoin trading.
Schlossberg said the volatility could continue for weeks and he himself would not buy bitcoin.
Bitcoin has captivated investors this year, Schlossberg noted, but the price swings of the past few days demonstrate bitcoin’s volatility.
Continuing declines could affect bitcoin holdings and impact investor sentiment as traders liquidate their positions and those they hold in more traditional asset classes. Bitcoin could also be affected by less volatility in other capital markets in the coming days, Schlossberg said.
He said $10,000 has emerged as bitcoin’s new floor price, considering it marked a breakout three weeks ago when it hovered around today’s level. The bottom line, according to Schlossberg, is that investing in bitcoin is like trying to catch a falling knife.
CNBC Poll: Many Still Buying Bitcoin
A CNBC online poll demonstrated that many people are not buying Schlossberg’ advice.
As of early Monday afternoon, the vote was fairly even among 5,687 voters, with 52% saying they are not buying cryptocurrencies and 48% saying they are.
Despite his current advice, Schlossberg in May urged people to include bitcoin in their investment portfolios. He called investing in bitcoin a way for investors to hedge their bets against market uncertainty. Schlossberg cited parallels between bitcoin and gold, noting that bitcoin is being called the “new gold,” due to its ability to retain value over time.
In addition to his role at BK Asset Management, Schlossberg is a co-founder of BKForex.com and has more than 20 years of financial market experience. He began his Wall Street more than 20 years ago at Drexel Burnham Lambert where he traded a variety of financial instruments, from equities and options to stock index futures.
Featured image from Shutterstock.
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