What Should Investors Make of Bitcoin Mania?

Unless you have been living in a cave the last few months, chances are you have seen plenty of headlines about Bitcoin and Blockchain technology. With Bitcoin rising in value over 1,000% in 2017, and developing an enormous market capitalization, it has garnered an immense amount of interest. But volatility has been the norm with Bitcoin — following its rapid rise in 2017, it has since fallen by more than 40%, including 30% in just over a day.

Despite all the headlines, few people could tell you what a Bitcoin miner does or what a decentralized network means, and formulating expectations from an investment standpoint is even more difficult. How should investors view the exploding area of cryptocurrencies and whether it would have any impact on a long-term investment plan?

This Issue Brief from Dimensional Fund Advisors — To Bit or Not To Bit: What Should Investors Make of Bitcoin Mania? — seeks to educate investors on how these new types of electronic money work, including their expected returns compared to stocks and bonds.

Watch our recent Making Sense of Markets video for perspective on the major headlines during the past quarter, including Bitcoin and Blockchain technologies.



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