About a month ago I had breakfast with an old neighbor. We talked about various things but at the end of the meal, he asked me if I was open to talking about my experience investing in crypto currency(ies). Robi had yet to invest in any cryptos and wanted to know if it was too late.
My advice was simple - take a little bit of money and invest in one of the more common cryptocurrencies (Bitcoin, Ethereum, etc.). I told him that it was less about making a return on the investment, particularly if he only invested what he was willing to lose. Which, by the way, is how you should always invest. The point of the exercise was to expand his knowledge about cryptos and learn more about the various platforms that enable investing in them (Robinhood, Coinbase), etc.
Our breakfast was on April 25th. On that date, Bitcoin was at $40,590. That is nowhere near its all-time high and about 20 days after that particular cryptocurrency started its downward slide. Which, if you take a look at the screenshot below from TradingView, was on April 5th. Bitcoin currently sits at $29,200.
That means my neighbor, based on my recommendation, became a first-time crypto investor at a pretty bad time. Like I said, do it for the education not the return.
If you look across my own cryptocurrency portfolio I would be down quite a bit if I hadn’t sold out of a lot of my positions in early April (reminder - that is when the dip really began). A lesson I learned from prior mistakes. I have kept some of my positions, notably in Solana and Ethereum.
That’s because I still believe that cryptocurrencies are a good investment. Here’s why.
Why I’m still a crypto currency investor
I am not interested in investing in cryptos purely as a speculative investment. The reason I am still bullish on some cryptos is that they have a lot of use cases. Particularly those that are housed on top of their own blockchains. Such as Ethereum and Solana.
Both Ethereum and Solana have their own crypto currency, but they are primarily blockchains that have a lot of development being done on top of their platforms. You can read about the solutions built on top of Solana here.
To be fair, both Ethereum and Solana have seen their values drop along with the rest of the market. But, it is because of those additional use cases that I have left my investments in their respective coins alone. I simply believe they will recover. Plus, by staking my Ethereum I’m earning a pretty nice yield.
Some people will say that now is a good time to be buying into the crypto-coin market. Generally speaking, I would agree. When an asset class is down significantly can be a good time to buy in, i.e. "buy the dip".
But, as far as speculatively investing in cryptos, I'm not sure we are at the bottom. Especially with all the work the U.S. government is doing around stablecoins.
However, if like me you believe in their uses cases (smart contracts, speed of processing payment, etc.) then investing in cryptos could be a good idea.
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