Investing experts warn that Bitcoin's volatile price fluctuations make it a high-risk investment: 'It's all speculation without any fundamental backing.'

Bitcoin's price has been particularly volatile as of late.

This week, the coin experienced a significant drop of 7% in a single hour, but has since partially recovered, currently hovering near $57,000 as of Thursday morning, which is still below its June peak of $71,000.

The fluctuations in bitcoin's price demonstrate its unpredictable nature and why financial advisors often view it as a risky investment.

Bitcoin's price has doubled since August 2023, but it's not suitable for all investors, especially those with low risk tolerance. Bitcoin's price volatility makes it less reliable as a store of value or inflation hedge in the short term.

The value of bitcoin as a currency is largely dependent on speculation and market sentiment, rather than its inherent worth, making it a riskier investment compared to stocks or bonds.

Is it advisable to include it in your investment strategy? While financial planners may have varying opinions on its incorporation, they generally agree that it's a high-risk investment that should not be the foundation of your retirement savings.

Should you invest in bitcoin?

While there are risks associated with buying bitcoin as a speculative asset, some financial planners believe it has value, but only with money you're willing to risk losing.

Unlike other cryptocurrencies, bitcoin is unique in that it has a limited supply, making it resemble a commodity like scarce resources such as gold. While gold has a long-standing reputation as a reliable store of value and has various practical applications in electronics, dentistry, and jewelry, bitcoin, which was introduced in 2008, is much more speculative as a commodity.

"R.J. Weiss, a certified financial planner and founder of The Ways to Wealth, advises that it is crucial to differentiate between necessary and optional investments. He suggests that Bitcoin or any cryptocurrency should not serve as the foundation of one's retirement plan."

According to Weiss, a diversified portfolio with stocks and bonds is likely to offer steady growth for retirement, which is important for most investors.

If you have a strong interest in crypto and understand the risks, a small allocation of about 1% to 2% of your portfolio can be considered.

If you're feeling uneasy about your bitcoin holdings due to the recent downturn in crypto prices, it could indicate that your investment was too large or not aligned with your risk tolerance, according to Weiss.

Other experts take a hard line against cryptocurrency.

"Jing Zheng, a CFP in Virginia, excludes bitcoin and other cryptocurrencies from her clients' portfolios, as she considers it a commodity whose value is heavily influenced by market sentiment, without any tangible assets or government support. As a result, predicting its value and volatility becomes challenging."

Jason Dall'Acqua, a CFP in Maryland, states that Bitcoin is too risky to be considered an investment and it's actually just speculation.

Jason Dall'Acqua, a CFP in Maryland, advises that while speculating may be suitable for small amounts of money, investing is a more disciplined and prudent approach to building wealth over time.

"According to Robert Johnson, a professor of finance at Creighton University's Heider College of Business, investors should adopt the mantra "just say no" when considering adding bitcoin to their portfolio, as it is purely speculative."

To stop worrying about money, enroll in CNBC's online course, Financial Wellness: Be Happier, Wealthier & More Financially Secure. We'll teach you the psychology of money, stress management, and healthy financial habits. Plus, use code EARLYBIRD for a 30% discount through September 2, 2024. Start today!

Sign up for CNBC Make It's newsletter to receive expert advice on work, money, and life.