(WXYZ) — Forget Mega Millions and Powerball, some people are getting rich this new year by buying up Bitcoin, but before you give it a try, we have a buyer beware tale to share so you don't waste your money.
Bitcoin is red hot. The digital world currency ran up from $20,000 in December to $40,000 by Jan. 10, making big money for investors. But then, it dropped by 20%, burning investors who arrived late to the party.
Fortune Magazine said Bitcoin is a bubble that has popped several times, most recently in March 2020 when it plunged 60%.
CNBC's Jim Cramer said it can be part of your investments and said he owns some, but he said only play what you can afford to lose, just like a casino.
Think about what can happen when a bubble bursts.
Most young investors may not remember the 1999 dot-com bubble, when any stock with a dot-com at the end doubled in days.
It all crashed in the dot-com bust and late investors lost fortunes. The poster child was Pets.com.
Bank of America calls Bitcoin "the mother of all bubbles," so invest accordingly. It's not a scam, and you could make big money, but you could also lose big money.
Could Bitcoin soon double or triple again? Sure, but it could also plunge like it has several times before.