As Bitcoin hovers around the US$100,000 mark, many investors are embracing cryptocurrency to diversify their portfolios.
Lam Vu, inspired by a friend’s success in Bitcoin investments, recently sought his advice. The friend had bought Bitcoin at US$36,000 in June 2021, sold at over US$60,000 four months later to earn a profit of VND33 million (US$1,299). Vu was encouraged to act before Bitcoin’s “big wave” of growth. However, his friend suggested waiting for a potential correction to below US$95,000.
Ngoc Anh is also exploring Bitcoin. An investor for the past year she is diversifying her portfolio and sees cryptocurrency as a promising option. “I believe Bitcoin will soon become a primary and widely accepted global currency,” she says. She plans to adopt a systematic investment plan (SIP) strategy, investing consistently each month, to average out costs in the long term.
She says this approach, which she has applied to mutual fund investments over the past two years, will suit her by reducing the stress caused by Bitcoin’s price volatility. She believes Bitcoin will recover from any dips and steadily increase in value over time.
Bitcoin’s value has surged by 130% this year to around US$100,000, with a market capitalization of US$2 trillion. It is now the seventh largest global asset by market cap, trailing gold and tech giants Apple, Nvidia, Microsoft, Amazon, and Alphabet.
In an interview with VnExpress, Le Sy Nguyen, Vietnam country manager at the cryptocurrency exchange Bitget, says Bitcoin’s milestone has boosted trading volumes for both Bitcoin and altcoins on the world’s third largest derivatives exchange.
Nguyen advises investors to proceed cautiously and do thorough research, citing risks such as market volatility, regulatory uncertainty and management challenges. He adds that an SIP is a practical way to accumulate Bitcoin while mitigating volatility. He also advises new investors to focus on consistent investments, avoid emotional trading and regularly monitor market developments.
Global asset manager BlackRock Investment Institute recommends allocating 1-2% of portfolios to Bitcoin, likening its risk profile to that of the “Magnificent Seven,” which includes major tech stocks like Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. However, BlackRock warns that allocations exceeding 2% significantly increase risk, noting Bitcoin’s history of steep declines, including losses of 70-80% since its inception in 2009.
Many investors have faced severe losses during Bitcoin’s downturns. Trung Tin, initially a casual cryptocurrency investor during the pandemic, became addicted to trading as his profits surged. At his peak, he invested over VND1 billion, depleting his savings and borrowing from friends. The November 2021 market crash wiped out his funds.
Refusing to accept the reality of his losses, the HCMC-based startup owner borrowed more from family, friends, colleagues, and business partners in a desperate attempt to recover his investments. “I dug my own grave when I borrowed money to trade derivatives with 125x leverage,” he laments. “Within two weeks I had to sell my car and land to repay debts. It was a horrifying experience, especially as it happened just weeks before Lunar New Year.” He says to this day he feels anxious whenever cryptocurrency is mentioned.
According to The Washington Post, therapist Aaron Sternlicht observes that crypto trading can be more addictive than gambling, largely because of its 24/7 market access. While cryptocurrency addiction is not officially recognized as a mental health disorder, researchers at Rutgers University in New Jersey have noted a rise in addicted traders. Excessive trading, driven by the prospect of massive returns, often mirrors gambling behavior.
A 2024 survey by Coin68 platform involving over 2,700 Vietnamese found that nearly 44% reported losses in cryptocurrency investments. Of the 56% making a profit, those avoiding derivatives and focusing on long-term strategies earned 10% more on average than their counterparts.
The derivatives market remains a source of significant losses. This trading method allows investors to speculate on cryptocurrency price movements without owning the asset, and incorrect bets often lead to a wipeout. During the recent Bitcoin price peaks hundreds of millions of dollars were lost. Experts strongly advise new investors to avoid derivatives trading.
Cryptocurrencies remain unregulated in Vietnam, which experts say hampers sustainable growth and transparency. The lack of a clear legal framework, and the resultant absence of adequate protections unlike in traditional financial markets, exposes investors to risks such as fraud and market instability, complicating the development of this asset class.
