Dear reader,
Last August I wrote a blog about cryptocurrency and Bitcoin. (Link here!!) Now six months later the world and people are adapting more to this digital currency. With Bitcoin reaching nearly $60.000 (last August it was $12.000) and the total market cap at almost $1.8 trillion dollars there has a lot been going on in the world of cryptocurrency. More and more companies, government officials and people are investing or using this digital currency.
This week is kind of an update to the world of cryptocurrency and the craze that is happening with it. I am going to explain what has happened to the world of crypto in the last few months, what is to come, why more and more people are getting into it and how you can turn investing into crypto your success.
Disclosure:
Before you start investing into cryptocurrency or any other kind of investments please do your own research. I want to fully disclose that I am not a financial advisor or planner, I don't recommend any cryptocurrency nor will I promote any cryptocurrency in this blog. I do own some different kinds of cryptocurrencies but I always disclose my positions, amount invested and returns.
The new world of crypto:
Since the start of the new year cryptocurrency and Bitcoin have taken off like crazy. At the start of 2021 Bitcoin was trading just under $30.000 and the market cap was a trillion dollars less then it is today. In just 50 days the market cap of the crypto market grew with a trillion dollars. This is very insane. If you look at the numbers from just a year ago you are fooling yourself from not investing a year ago and you would have made great returns. But no one has a crystal ball and can see the future.
Why has the market cap added a trillion dollars in just 50 days? There are many different reasons for it. Some are more correlated and others stand loose from any big news. First and foremost is that last year we had the halving, this means that every block mined on the blockchain gets cut in half. It becomes harder and harder to mine Bitcoin, the rewards are lower and thus the supply of Bitcoins gets smaller. There are only 21 million Bitcoin and the last Bitcoin will be mined in the year 2140. The basic reason for Bitcoin is supply and demand. That is why the price has been rising so fast. Low supply and high demand.
The major headlines for this year that has had influence on the crypto market is Elon Musk, first with endorsing DogeCoin, set up basically as a meme towards Bitcoin not long after Bitcoin was developed. It has got endless publicity and it skyrocketed over 1000% in a matter of days. The second part is that Tesla is adding Bitcoin to their balance sheet. If this means that you can buy your Tesla with Bitcoin is not yet sure. But many other companies, institutions and investors are following this hype and trend. More and more companies are speculating with this idea and mass adoption is likely to follow.
The future of cryptocurrency:
Like I mentioned in the introduction no one knows what the future will hold for cryptocurrency. What I do know is that more companies and politicians are in favor of cryptocurrency. Every week new companies are looking into it and slowly the adoption is becoming a reality. For most people it is a way to store there wealth. With zero interest on savings people are looking for ways to invest to get a rate of return on their money.
My guess is that once more and more companies will add Bitcoin or other currencies to their balance sheet adoption will take place. The use case of Bitcoin and other crypto will become a medium of exchange and payments for products like Tesla's will be done. Also governments will find a way to regulate it, tax it and join in to a decentralized currency. In China they are testing a digital Yuan, soon Europe and the United States will follow.
FOMO:
Fear, Of, Missing, Out. This was what led the crypto bull run in 2017 and the first month of 2018. People were feeling like they were missing out on this new hype. Only this time is different. No ICO's (Initial Coin Offering, like an IPO but then for crypto) but actually the potential to start investing in a new highly volatile asset class. With projects and products that actually have a chance to make it more and more people are discovering how easy it is to get into this market.
A few year ago people where laughing at me for investing in these assets, now everyone wants to know how they can get started. People want a piece of the pie and because everyone around them is doing it they are feeling like they are being left out. Also you read and hear more about it. In business news this is becoming a bigger asset that they are covering just as you see more and more ads that help you to start investing with just a few dollars. The rumors and speculation from great influencers such as Elon Musk help to.
How to invest successfully into crypto?:
Every investor has their own style and so do I. I don't recommend anything but I do have strategies that have helped me out during my investing career. I am a long term investor and I do not trade with any of mine investments. As mentioned in the disclosure, do your own research on what each and every crypto does and make your decisions based on your own judgement, intuition and knowledge. DO NOT TAKE ANY INVESTMENT ADVICE FROM PEOPLE ON YOUTUBE OR TWITTER.
The first thing is to look at where you are buying your crypto, is it a trading platform, an exchange or a broker. While you do this look at the fees, ratings and reviews about these platforms. The second is to make an investment plan. In your investment plan you are going to look at how much you are going to invest, when you want to invest and when you want to cash out. Third is research into the investment you want to make. Find everything that is to know, look at the market cap, volume of trading and where it is trading.
There is a risk with investing, know that there is a possibility that you can lose part or all your invested amount. This is a highly volatile market and it tests out your emotions. If you want any personal help, more tips and tricks I will be glad to help you if you need it. As a successful investor you must listen to each side of the story and make your decisions based on knowing all the facts.
If you are an early investor into crypto you must enjoy this bull run we are on. Every market has ups and down and trying to time the market is impossible. I hope I was of help to inform you more about what is happening in the world of crypto and what you can do to get started effectively. If you want more information let me know in the comments or send me a message.
Thank you for reading this week's blog post and see you next week.
Franklin, Moments 2 Success
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