Americans are apparently buying Bitcoin with their $1,200 stimulus checks, but this isn’t the time to be speculating on a risky asset that loves to cause maximum pain. With jobless numbers breaking records on a weekly basis due to the impact of coronavirus, now is the time to be taking a safety-first attitude with your money, and Bitcoin, for all the reasons we love it, is certainty not this.
$1,200 Bitcoin Purchases Jump
Brian Armstrong, Coinbase CEO, posted a chart on Twitter that suggested a spike in purchases of Bitcoin using exactly $1,200:
There was other anecdotal evidence of this on social media:
OMG. My cousin, who never listens to me because she’s a Herbert, just bought bitcoin with her Trumpbux stimulus check! pic.twitter.com/oTHlsmQzgj
— Stacy Herbrrrt (@stacyherbert) April 16, 2020
— Girrrrrl Gone Crypto (@girlgone_crypto) April 18, 2020
There are a number of reasons why spending your once-in-a-lifetime stimulus check on a volatile asset is a bad idea, regardless of your current financial position (we’re assuming no one reading this is a millionaire).
Coronavirus, and the varying responses to it from state governors up and down the country, has led to over 22 million people now being out of work. The virus and its unique knock on effect of reduced social interaction has impacted society in a way we have never seen before, with jobless numbers absolutely dwarfing those from the 2008 economic crash.
It should go without saying, but if you are out of work due to the coronavirus and its impact then don’t buy Bitcoin with your check in the hope that you can make a few extra bucks out of it. Bitcoin is not a get rich quick scheme, and you could just as easily lose that money with a swift turn of the market. This is the time to be thinking about the essentials of life, and Bitcoin, not matter what we like to think or say, is not one of them
If you are in work, it can be tempting to think that your job won’t be affected. However, very few jobs are absolutely safe in a depression, and given that comparisons with the Great Depression in 1929 are becoming even more voluble, there is a good chance that even if you don’t need you $1,200 right now, you might do quite soon.
Seeing as we can’t predict the future, it’s better to keep the money handy should the worst happen and not buy Bitcoin or a shiny new TV with the cash. Again, you may think that you know the market and that you can double your money or better before you need to call on it, but there is no guarantee of this whatsoever.
Only Invest What You Can Afford to Lose
There is a saying in investing that is particularly well suited to Bitcoin – only invest what you can afford to lose. We love Bitcoin for all that it represents, but we are not naïve enough to think that we know what its price is going to do. We know what we want it to do and what it should do, but we wouldn’t bet anything we can’t afford to lose on it – and that’s the key.
If you don’t have faith in the banks looking after your money, then you could consider buying a stablecoin with your check, although this also carries its own risks. We may not all like the dollar and what it stands for (or the rampant printing of money that will inevitably devalue it over time), but it isn’t going anywhere for a while, so just this once you’re probably safe holding that particular shitcoin until this blows over.