The FTSE 100’s steady recovery continues to impress. But it pales in comparison with the stonking price gains Bitcoin has recorded since hitting March’s lows.
The virtual currency’s soared 110% in value in the three-and-a-bit months since then. By comparison, the Footsie’s daily gains have been limited to modest single-digit-percentage rises at best. Still, I’d much rather invest my hard-earned money in cheap FTSE 100 shares than in Bitcoin.
Buy Bitcoin? No thanks
It’s no mystery why Bitcoin attracts so much print yardage today. We all love a ‘get-rich-quick’ story, and the idea of reaching our long-term investment goals years and years ahead of schedule is terrifically appealing.
However, Bitcoin’s rampant price gains of recent weeks illustrate exactly why the cryptocurrency is such a dangerous investment. Extreme price movements often follows no obvious pattern, whether viewed from either a technical or fundamental perspective.
The difference between making big returns or losing vast amounts of your cash is as unpredictable as the outcome of flipping a coin.
Like all get-rich-quick schemes, Bitcoin represents no little danger to investors. It really is the ultimate ‘Marmite’ investment, with debate raging on whether it is the asset to own in an increasingly digitalised world, or whether it’s worth no more than fresh air.
Investment guru Jim Rogers chimed in on the issue again in recent days. He commented that “cryptocurrencies didn’t even exist a few years ago, but in the blink of an eye they became 100 and 1,000 times more valuable. This is a clear bubble and I don’t know the right price. Virtual currency is not an investment target. It’s just gambling.”
I’m not saying that fans of Bitcoin will be proved wrong over the long term. But at this stage it’s impossible to quantify the true value of cryptocurrencies like this. Rogers incidentally predicts that Bitcoin “will go to zero” eventually.
Stick with the FTSE 100
This is why I would much rather continue investing my money in stocks than Bitcoin. When you buy a share you can lay claim to something tangible, from a share of the profits they generate to the chairs its workers sit down on and the coffee in their mugs.
Investing in FTSE 100 shares remain an attractive idea right now too. As I said at the top of the piece, Britain’s blue-chip index has risen steadily rather than spectacularly. But any gains are quite impressive given the state of market-sensitive news flow.
For example, the FTSE 100’s near-1% rise on Tuesday comes despite fears of a US-China trade deal collapse and another spike in new Covid-19 cases in Germany. This suggests to me there still remains plenty of blue-chip shares too attractive to miss at current prices.
My own research shows there are a galaxy of great value stocks to choose from right now, whether you’re hunting stocks for growth or for those paying big dividends.
So I say forget about Bitcoin and go bargain hunting on the Footsie.