Reason No 1 Not To Buy: Cryptocurrency’s Extremely Volatile
Stocks are known to be a far more volatile investment choice than bonds. And that’s enough to spook some investors. If you’re already uneasy about owning stocks, you’ll need to prepare for an even more wild ride with cryptocurrency.
That may not align with your risk tolerance and comfort zone. If that’s the case, there’s no reason to push yourself to buy cryptocurrency — not when you can take on less relative risk in the stock market.
Cryptocurrencies For A Strong Crypto Portfolio
And while bitcoin is very much different from the other cryptos Ill highlight, I still think it deserves a part in your portfolio. Even as some of the other coins take the headlines, bitcoin is still $850 billion market cap or about 41% of the total cryptocurrency market. With that leadership and the longevity, its clear that institutional investors and corporations have a level of comfort with bitcoinat least on the investment side that you just dont see in other tokens.
Thats going to mean we continue to see most institutional investing and corporate cash go into bitcoin which is a big part of the price forecast well look at.
So even though I like the blockchain use case well see in the other coins, bitcoin still leads the crypto universe. Think of bitcoin as the United States of the global economy. The saying used to go, when the U.S. economy sneezes, the rest of the world catches a cold because the U.S. economy was such a powerful driver. Its a lot like that with bitcoin and the other altcoins and why I still think you need bitcoin in your portfolio.
Even with the recent selloff, bitcoin is still up 326% over the last year. As for price forecasts, I like to use an average approach from different predictions.
In fact, Draper estimates bitcoin could reach $250,000 by the end of next year which would be more than a 5-fold return, and beyond from there.
Earn up to $250 instantly when you open an account on BlockFi and invest in cryptocurrencies!
Buy And Hold A Digital Asset
The next best method is to buy a digital asset to hold it over a long period of time . If you had bought Bitcoin in 2015 when it traded at around $200, you would currently be enjoying 180x your initial investment.
A great example is 21-year old Erik Finman. At the age of 12 in 2011, he received a gift of $1,000 from his grandmother. Instead of saving the money for college, Finman bought $1,000 worth of bitcoin when it was valued at about $10 $12. He reportedly owned 446 BTC and was worth $4.5 million as of August 2019.
Read Also: Private Equity And Investment Banking
Who Is The Youngest Bitcoin Millionaire
Eric Finman is widely believed to be the worlds youngest Bitcoin millionaire after he invested $1,000 in Bitcoin at the age of 12 in 2011.
In 2020, he is believed Finman had approximately 431 BTC, which at the time was estimated to be around $4.8 million, according to Rebecca Aydin of The Business of Business.
What Gives Ethereum Value
In order to use the Ethereum blockchain , youll need ETH to pay a transaction fee.
So what can you do on the Ethereum blockchain? While the technology is still very young and frankly, untested in many ways people can use Ethereum to run decentralized applications, or dapps. Dapps essentially cut out the middleman in industries where middlemen have for the most part always existed, relying instead on smart contracts that run on Ethereum. To use these applications, youll need ETH to pay for the cost of gas a measurement of how much computing power is needed to run the application. Examples of dapps include:
Direct peer lending that earns interest.
Insurance without the insurance company.
Payments without the payment processing company.
Music streaming in which the money goes directly to the artist, not a streaming platform or record label.
Art auctions without an auctioneer.
Code collaboration without a central server.
This is all extremely complex, so if youre confused, dont worry. Thats normal. But put very simply, when youre investing in Ethereum, youre betting that people are going to keep adopting and using new Ethereum-based technologies like the ones listed above, which could possibly drive demand for ETH and its market value higher.
Don’t Miss: Goldman Sachs Investment Account Minimum
What Is The Best Crypto Investment Strategy
One of the most lucrative and lowest risk investment strategies in the world is crypto arbitrage. This involves taking advantage of temporary price discrepancies across digital currency exchanges to make a profit on the spread. For a brief period, a cryptocurrency will be available at different prices on different exchanges at the same time. Crypto arbitrage earns you a profit by identifying these instances, buying the coin at the lowest available price and then instantly selling it on the exchange where it is being offered for the highest price, before the price disparity is resolved.
One of the top apps in this field is ArbiSmart, an EU licensed, fully automated crypto arbitrage platform. The company, established in January 2019, has an AI-based automated algorithm that does all the work for you. It scans over twenty exchanges at once, 24 hours a day looking for and then exploiting arbitrage opportunities.
This is without taking into account the huge capital gains that can be earned with the RBIS token. It has not yet been listed but has already risen in value by 120% in the eighteen months since it was introduced and is projected to go up by 3,000% by the end of 2021. This exceptional rise in value is a result of the global growth of the platform, which is rising in popularity all the time and the companys expanding financial product suite.
Reasons To Invest In Crypto
Will 2022 be the year you start to invest in cryptocurrency? That’s really your call.
But if you’ve an active investor who’s yet to dabble in the world of cryptocurrency, you may be feeling pressure to get started. Doing so is a move that could end up working to your benefit — or backfiring. Really, there’s no way to know.
In fact, it’s easy to make the case that you should be buying cryptocurrency, and it’s also easy to argue that it’s a poor choice. Let’s dive in.
Don’t Miss: Stated Income Investment Property Loans
How Much Shiba Inu Do You Need To Become A Millionaire In 2022
How much Shiba Inu do you need to become a millionaire in 2022? Well, that depends on how optimistic you are about Shiba Inus prospects.
If you are super optimistic and believe that Shiba Inu could trade at $1 by 2022, then all you need is to buy 1 million Shiba Inu today. However, if you are averagely optimistic and believe that Shiba Inu could hit $0.01 by 2022, then all you need is 100 million SHIB today, and you are set.
However, if you are a conservative investor like me, you could expect Shiba Inu to eat up one more zero in 2022. In such a case, you would need about 10 billion Shiba Inu to become a millionaire by 2022.
While any of the above scenarios is plausible, I am more inclined to go with 10 billion SHIB making you a millionaire by 2022. There are a couple of rational arguments behind this analysis.
Should You Invest In Cryptocurrency
It’s hard to ignore the allure of crypto. It’s a shiny new thing that promises to change the world, and if prices continue on their upward trajectory, you could make a serious amount of money.
However, think about your risk tolerance before you invest. If you’re a relatively risk-averse investor, buying crypto could lead to many sleepless nights during periods of volatility.
Bitcoin regularly drops by at least 20%, and it’s lost up to 80% of its value in the past. If you’re starting to sweat just thinking about your investments plummeting by 80%, crypto may not be the best option.
Also, be sure your financial situation is in good shape before you even consider investing in crypto. Only invest money you can afford to lose, and double-check that you have a solid emergency fund with at least three to six months’ worth of savings. This is so that you won’t need to sell your crypto investments if you face an unexpected expense.
Finally, make sure you have a strong, diversified portfolio . Because cryptocurrency is so risky, you’ll want a solid core portfolio that you can fall back on if your crypto investments take a turn for the worse.
Cryptocurrency can be a lucrative investment, but it’s also one of the riskiest investments out there. By weighing the risks and rewards, it will be easier to decide whether cryptocurrency is the right choice for you.
Read Also: What Is An Impact Investment Fund
Limit Your Exposure To 5% Or Less Of Your Net Worth
While I’m bullish on blockchain technology and do believe it’s the future, it’s too early to take too much risk investing in any cryptocurrency. I see far too many investors putting all, or most, of their net worth in crypto.
I get emails every week from people who have taken out loans, second mortgages, or leveraged their crypto holdings to buy more crypto. This is dangerous and dumb. Why risk so much of your life security and freedom in one investment?
While some will strike it rich, would you bet your financial life on a coin flip? I’m a big believer in taking risks, but it needs to be calculated risk.
It doesn’t make any sense to invest more than 5% of your net worth into crypto and even less if you’re just getting started. You should be investing most of your money in more historically predictable asset classes like stocks, bonds, and real estate.
As your net worth grows and you learn more, you can definitely invest more of it in crypto, but you need to feel comfortable with your risk. Are your crypto holdings keeping you up at night? Would your life be ruined if your crypto portfolio went to $0? Then you likely have too much invested.
Want To Buy Ethereum Heres What To Consider
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list ofour partnersandhere’s how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.
Buying Ethereum involves converting your U.S. dollars into ether, or ETH, which is the currency of the Ethereum blockchain. People who own Ethereum can use it as payment for goods and services, or to cover fees for the processing power used to carry out complex transactions in fields such as finance, art and computer science.
Many owners of Ethereum have also used it as an investment vehicle in recent years amid a rush of interest in the crypto space. Ethereum hit an all-time high late in 2021, and it has been gaining on Bitcoin in terms of global market capitalization.
But before you make any decisions, remember that cryptocurrency can be a risky asset whose market value can fluctuate significantly.
Here are some pointers on how to buy Ethereum and some factors to consider before you do.
Also Check: Masters Degree In Finance And Investment
Should You Start Buying Cryptocurrency
There’s money to be made with cryptocurrency, but that doesn’t automatically make it the optimal investment for you. That said, if you’re going to own cryptocurrency, start slowly. Invest a small portion of your money in digital coins, and see how well you fare and how well you’re able to sleep at night.
Also, do your research before diving in. There are thousands of cryptocurrencies to choose from, and the currencies that get the most press may not be the ideal ones for your portfolio.
10 stocks we like better than Walmart
When our award-winning analyst team has an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Walmart wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
Can You Become A Crypto Millionaire With $10000
If you want to venture into the crypto market with $10,000, you have more options available. Also, the chances are much higher. With $10,000, you would need a 100x ROI in 2021 to become a millionaire. Is that achievable in 2021?
Yes, if you manage to find the right cryptocurrency. For example, Verge managed an insane 2,000x growth in 2017 when Ethereum achieved a 165x ROI. XRP and NEM both did a combined 120x in 2019. These are all real crypto projects, not pump and dump schemes.
With $10,000, you can also venture into mining of cryptos or even diversify your crypto portfolio and wait for them to explode. If you decide to go down the path of trading with a capital of $10,000 also means that you have more to put on the table for more profits.
Read Also: I Want To Start Investing In Cryptocurrency
Cryptos To Buy: Monero
To address Bitcoins privacy weaknesses, Monero developers implemented confidential transactions. These allow for partially anonymous transactions that are guaranteed safe from hacks due to the implementation of ring signatures which obscure users identities without any actual input being known about them on a transaction-by-transaction basis all while remaining completely verifiable through signature checks.
Bitcoins are not anonymous. They can be traced and blocked by regulators if there is suspicion that users may have used them for criminal activity. These are traceable since the public knows about each Bitcoin transaction and certain data points on the parties involved.
On the other hand, the Monero blockchain is completely hidden from public view. This means that transactions are private, and users can complete them without revealing personal information to anyone in the process not even other members of its network.
Pump And Dump Schemes
Crypto projects that offer no real value are often referred to as pump and dump schemes. These projects put a lot of hype around the price and future of the asset .
Investors jump in through these misleading adverts, the price of the project spikes, and fraudsters behind the project sell off their holdings. The price hits rock bottom, leaving investors with valueless digital assets.
This is a very common form of fraud in the crypto industry. An example is Gemcoin, which is claimed to be backed by real mines around the world. Founder Steve Chen was sentenced to 10 years in federal prison for defrauding 70,000 people of $147 million.
Before making any form of investment, make sure to dedicate time to research any project you want to invest in. Pump and dump schemes are easy to spot, they have no real-world use case and also have no feasible future roadmap.
Don’t Miss: Non Profit Real Estate Investment
Can Cryptocurrency Make Me A Millionaire
Yes, you can become a millionaire by investing in cryptocurrency, but dont think its so straightforward. Nothing is guaranteed and plenty of people have lost everything investing poorly in crypto.
You need to understand how the market works and some basic understanding of trading too.
But perhaps the most important thing you need is patience and to understand that while there is a lot of money to be made, you shouldnt stress over every little up and down.
If you do find yourself stressed, youve probably invested way too much in crypto. Money that you probably needed for other things.
Understanding Risk Versus Reward
It’s easy to get caught up in crypto’s monumental gains. Bitcoin has surged 372% in the past year. Its competitor Ethereum is up more than 1,500% in the same time period, and Dogecoin has soared by more than 19,000%.
Based on those numbers alone, it seems hard not to get rich with cryptocurrency. But it’s important to remember that past returns don’t necessarily equate to future earnings, and crypto is still a very high-risk investment.
Crypto prices could continue to rise, but they could just as easily plummet. In fact, Bitcoin’s price has already dropped by more than 26% over the past month, proving that cryptocurrency is incredibly volatile.
Bitcoin Price data by YCharts
Part of the reason crypto experiences so much turbulence is that it’s a highly speculative investment. Nobody knows what the future holds for cryptocurrency. Whether it becomes a runaway success or a massive failure is anyone’s guess. If it succeeds, you could make a lot of money by investing now. But if it crashes and burns, you could lose everything.
Don’t Miss: Best Investment Platform For Small Investors
Choose A Cryptocurrency Exchange
Because Ethereum is one of the most widely-circulated cryptocurrencies, you have many options in selecting where to buy it. This decision will affect the choices available to you for payment and storage, however, so you should do your homework. There are several types of exchanges and marketplaces you can consider.
Online stock brokers: Buying cryptocurrency from an online brokerage that offers it is one of the easiest ways, but it can come with serious drawbacks. While online brokers have made it easy and cheap to turn your cash into crypto and vice versa, check the fine print to see if the brokerage lets you move cryptocurrency in and out of the account some brokers don’t. In the eyes of crypto purists, this essentially nullifies the entire point of owning a digital currency.
Centralized crypto exchanges: These are a common way for people to buy cryptocurrency. Centralized exchanges such as Coinbase act as middlemen in the buying and selling of cryptocurrencies, and tend to have larger selections than platforms that primarily deal in conventional assets such as stock. These can be a good choice if you’re somewhat familiar with cryptocurrency, but are looking for a user-friendly experience. Some people, on the other hand, might feel that a centralized broker is contrary to the spirit of blockchain technology, which is supposed to be decentralized.
» Ready to invest?Here are our picks for best Ethereum and cryptocurrency exchanges.