“If you’re trying to figure out where to store your life savings, traditional assets are still your safest bet,” warned the co-founder of a major cryptocurrency. Vitalik Buterin, responsible for creating the ethereum blockchain and its associated digital coin took to his Twitter account this weekend, urging people to think twice about throwing all of their money behind the hyper-volatile asset class. (See also: Bitcoin Will Hit $320,000: Winkelvoss Twins.)

“Don’t put in more money than you can afford to lose,” he wrote. The surge in digital currencies, particularly Bitcoin, the world’s largest cryptocurrency by market capitalization, has led some retail investors to make impulsive decisions in order to get in on the action. As bitcoin reached record highs near $20,000 in December, it was common to see people taking out mortgages or opening credit cards and equity lines to fuel the mania. Discount brokerages such as TD Ameritrade, E-Trade and Charles Schwab also reported surging trading volume, as access to products such as bitcoin futures drove a record number new account openings. 

Bubbles, Volatility and Scams

Cryptocurrencies crashed earlier this year, with bitcoin falling below $7,000 and recovering to above $11,600 as of Tuesday afternoon. Bitcoin investors have become accustomed to major price swings, given that cryptocurrency has lost 80% of its value on at least six different occasions over the past few years. 

Ethereum has seen an equally volatile run, currently trading at $931.99, up more than 7,000% over 12 months ago, when the Digital Currency traded below $13. In just the past few months, ethereum has spiked as high at $1,400 and as low as $580. 

Earlier this year, Buterin criticized some crypto investors for flaunting their newfound wealth, indicating that they should instead be working on coming up with ways to use the technology for “achieving something meaningful for society.” He has repeatedly warned investors regarding bubbles and volatility in the high-flying digital currency market. As one of the most impersonated public figures on Twitter, the ethereum co-founder again urged users not to trust people offering cryptocurrency on social media. (See also: Arizona Poised to Accept Tax Payments in Bitcoin.)

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns cryptocurrency.

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