Some financial advisors have dubbed the phenomenon the “F.O.M.O Syndrome,” or the fear of missing out on a supposedly sure thing — whatever the motivation, around one in five Bitcoin buyers are borrowing to add to their holdings.
Speculators are so desperate to get in on investing in Bitcoin that they are investing with borrowed money from high interest credit cards or home equity lines of credit.
According to a global survey conducted by LendEDU, a research company that studies investment and lending patterns, well over 18% of Bitcoin speculators and investors have invested in bitcoin using borrowed money.
What’s worse, almost 22% of these investors have yet to pay off their Bitcoin investing debt.
Bitcoin rose by well over 1,000% at the end of 2017. The extremely volatile digital currency has precipitously dropped in value since then.
In December 2017, Bitcoin stock was valued at almost $20,000 a share but hovered around the $14,000 once 2018 began, crashed down through $10,000 and trades now at just above $11,300.
Most analysts and financial market experts say that the most prudent way to invest in Bitcoin is via automated clearing house financial transfers, or ACH, which is an electronic and online payment infrastructure for financial transactions.
Also, it is important to never invest in such volatile, virtual currencies with more money than you are willing to lose.
Atlanta, Ga. financial advisor Robert Schmansky was stern in his assessment of the massive risk involved with investing in Bitcoin.
“The most important thing to realize is this is not an investment, it’s a gamble. When we gamble, we risk total loss for the chance of a windfall,” he said.
“Think of Bitcoin like you would a lottery ticket. You’ll be lucky if you get a few matching numbers and only lose a little, and there’s very little chance you will cash out with a windfall.”
Cocoa Beach-based financial advisor Steven Podnos was even more terse in his assessment of speculators and investors who invest in Bitcoin with borrowed money.
“I think this Bitcoin investment scheme is insane. Presumed ‘scarcity’ and newness are attracting attention,” Podnos told The Washington Post.
“No one that is buying it at this point is counting on anything but having a ‘greater fool’ come along who will pay more for no reason other than attracting the next greater fool.”