“Crypto seems more complex and speculative than iPhones or EVs or chips, or is it?“– Paul Ebeling
Cryptocurrency is gaining broader adoption among investors now. Fintech companies are making it easier to get started buying and using crypto.
And companies like Tesla (NASDAQ:TSLA) is experimenting with accepting Bitcoin (CRYPTO:BTC) as payment, and El Salvador’s government has even made it legal tender in the country. Others are studying it.
After a Fibo price pullback in the crypto market in the past 2 months, some investors see the declines as an opportunity to buy in.
The Big Q: Should you buy some?
The Big A: Here are 3 reasons you should invest in crypto, and 1 reason perhaps you should not.
1. Decentralized finance is the future
Y 2020 saw a lot of decentralized finance, or DeFi, projects enter the market, but the idea of using DeFi applications for transactions is still niche. But, the ability to exchange currency and send money quickly and inexpensively holds a lot of promise for a global economy, and that’s why DeFi will play a significant role in our financial systems in the future.
2. Increased adoption from institutional investors
A Key factor that made the recent rally in Bitcoin different from prior 1’s in the cryptocurrency’s price is the broad adoption among institutional investors. More and more financial institutions are creating a position in Bitcoin as part of their portfolio.
3. Portfolio diversification for stock/bond investors
If the majority of your portfolio is composed of stocks/bonds, Bitcoin and other cryptocurrencies can offer a good form of diversification. The price correlation between cryptos and the US stock market is about Zero. That means the crypto market is unaffected by the stock market, and vice versa.
1. A get rich quick goal
You can grow your wealth extremely quickly if you pick the right crypto asset.
The goal of investing in cryptocurrency is to make a profit, but it is not likely you will see the value of your crypto portfolio increase by 100X in just a few months. If you buy a currency or token with an investment thesis, and you are right, you should see the value increase over time similarly to buying a stock in a company with a strong outlook.
Investing in this space does not have to be like playing the lottery. There are good reasons to buy cryptocurrency, but trying to get rich quick is not one of them.
Have a prosperous week, Keep the Faith!