It’s hard to ignore the fact that many of your friends bought crypto in the past few months. Many financial pundits are now coming out with calls for investors to at least hold up to 5% of their portfolio in cryptocurrencies. With open calls for bitcoin to hit US$100,000 in 2018, are you perhaps now considering investing in crypto more seriously?

Did you friends told you that you could eventually buy a lamborghini? What should you do if you’re in this pickle?

Here are some points to consider before actually diving in:

Growing market capitalisation, and adoption (of crypto)

One thing you can’t ignore is the growing crypto market capitalisation. At approximately US$400 billion (as of the time of writing), it’s hard to believe that a year ago, it was only roughly US$54 billion! Say what you might on its crashing prices, investors who time their entry carefully have got many times return on their money. Crypto’s price and market capitalisation ascend is expected to continue, with plenty of volatility in between, of course!

Also, let us stop any one of our readers before someone stops to say, “but these prices are not supported by any basic fundamentals!”

The truth is very much otherwise. As adoption of many of these cryptos increase, it creates a use case. As such, the prices are not to say totally plucked from thin air. To say that bitcoin – which is traded in the billions (of dollars) each day, is worth nothing is very premature.

Governments are digitizing transactions (and cash)

The call to ban cash transaction above A$10,000 in Australia recently drew a lot of flak. The reason for such a policy – the usual suspects such as “money laundering” and “tax evasion”. Problem is, it’s not only happening in Australia but increasingly around the world.

On one hand, it means digital payment adoption will increasingly be adopted (albeit by force); on another it’s a blessing in disguise for bitcoin (or crypto) advocates.

It’s no surprise also that governments who are crypto friendly (most recently Thailand passed a 15% crypto tax), are also rushing to roll out digital payment options for consumers. Banks are offering crazy promotions just to use their apps, and they even give popular payment wallets (Airpay, Bluepay & LINEPay) a run for their money.

Newly installed across supermarkets in Bangkok – to not only enable self-checkout process, but pay using all the popular mobile payment apps

The way we see it, there’s only one direction – all transactions will eventually be digitized. Whether or not it will be in fiat currency (or mixed – crypto and fiat) remains a question.

Many ICOs go to the trash, so study the business carefully

The current market problem is not only that there’s too many ICOs to consider buying – is that they mostly have no business to start with. Thus, it is not unusual to have more than 90% of ICOs actually flopping, and their coins cease trading (or exist) after one or two months. This is becoming a serious issue affecting the industry.

We can only advise the following: even if you’re feeling confident after reading the whitepaper of the ICO, continue on and review the team behind the project (for any track record), and the business idea – if it will be profitable (Google for some basic research – or read The Low Down)

Conclusion

In short, if your friends bought crypto – and you’re tempted, then please observe the following universal truths:

i) Invest money you can afford to lose

ii) Invest only part of your portfolio for exposure to potential gains

iii) Time your entry (when prices are low), and invest in sound tokens for starters

Remember, this is not in any way a financial advise to buy or sell cryptos. It’s just our two (bitcoins) worth of advice for our fellow friends. Also, just in case you’re interested to follow our crypto series, check it out here.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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