Some people asked me if they should invest in Crypto and Bitcoin, here are my thoughts…
Short answer, you need to decide for yourself and do some research. Do you believe in crypto? If so, how much? I never really mentioned investing in crypto to anyone except a few family members and a friend or two. Even when I did, I said, “who knows what will happen but I think it is interesting and has potential.” I would tweet about crypto but just some thoughts and news. I also told the family and friends back in the Summer of 2017, nobody listened then, but they did get very interested in December, at the highs. I told them it had a massive run and could crash so invest with caution.
One 20 year old I know talked about investing in Bitcoin with some money he was getting. I said go ahead but you are possibly buying at the top. If it goes down do you need that money? If you do then I don’t think you should buy it. I also told him to go read and learn about it. Now, I am a good few years older than him and have some life experience (maybe even some wisdom?) and I was trying to caution him. While I get excited about crypto investing, I also ALWAYS temper my advice to others and give both sides of what could happen. I don’t ever push my opinions on people or encourage reckless investments.
He bought a very small amount and was glued to the screen hourly as it went down and down month after month… He could not handle it declining and sold after a few months for a loss. Like many people he was looking to blame someone for the loss. He somewhat jokingly asked me why I told him how to use Coinbase and I reminded him I said not to invest more than he could lose and to just buy it and leave it. Overall he lost a small amount and thankfully did not invest more than he could afford to lose. But he was basically like a lot of investors that came in at the top and watched it all disappear.
Now I totally get it, most of us have had FOMO at some point in life. It could be investing, having the latest clothes, knowing the latest gossip, or whatever else people fear missing out on. Last week I read this article in the New York Times, After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors. The article covers people like Tony Yoo. “Yoo, a financial analyst in Los Angeles, invested more than $100,000 of his savings last fall. At their lowest point, his holdings dropped almost 70 percent in value.” Now I have no idea about Tony, what he has to lose, or his lifestyle. That is a good amount of money though, and he lost about $70k so far. It sounds like he still believes in crypto, which is great, but buying at the top and losing a large amount is tough for anyone to stomach.
Another person they interviewed in London said he was now financially ruined. But investors need to take some responsibility. Not saying that these people are not, but they sound angry. Why are you putting everything into one asset? All your eggs in one basket? Risking the rent money? Don’t do that. Just don’t. It’s common sense and you are not going to convince me that people don’t understand the risk. They knew the risk and did it anyway.
You can make a huge bet but don’t bet it all. If it goes to zero how will it affect you? Did you lose more than you put in and now can’t afford food? Calculated risk is best, not only what you can afford to lose, but also do some homework, make an educated guess.
This could happen in the regular stock market, and has a few times. So let’s not single out crypto as some unusual animal here. Markets go up and down. Crypto is a new asset class, its volatile. People think its either the next big thing or a huge scam. This website exists because we think crypto has an interesting future and is a good potential investment, but it is not advice for you to go invest. It is just some thoughts and opinions from some random person on the internet.
Do not take anything from anyone as gospel. People have beliefs, biases, and agendas. Especially right now in crypto. There is a lot of junk out there and terrible people peddling crap. Crypto and Bitcoin could all crash tomorrow and be the biggest scam ever, nobody really knows yet, only time will tell.
So do your own research and make informed decisions, and please do not invest more than you can afford to lose!
Also published on Medium.