Crypto

Power of Patience: The secret to crypto investment success

Published

7 months ago

May 12, 2024

Power of Patience: The secret to crypto investment success

“Rome wasn’t built in a day.” “All good things take time” and countless other sayings all refer to the same fact that patience is a virtue. And one of the key aspects of life, where the value of patience materializes, is in the domain of investing. Long-term investors often have time horizons of more than a decade, to watch the seeds of their investment grow into reward-bearing fruits.

But this basic truth of investing seems to be getting lost in today’s world of short attention spans and instant gratification.

Nowhere is this more prominent than in the risky (yet rewarding) world of crypto assets, where speculative trading overpowers fundamentals-based investing and drives up overall volatility across the asset class.

Crypto Tracker

Most view crypto as a means of getting rich quickly and are on the lookout for the next BTC, ETH, SOL, or even DOGE and SHIB, with the promise of multi-bagger returns, and over-compressed timeframes.At the very core of this greed for quick exponential returns from crypto, is the difference in mentality of evaluating the asset with the lens of an investor vs a trader. The same user might have the “patience of an investor” when deploying capital in equities for the long term but would seek quick returns from his “trading bets” in crypto. This approach is being fuelled due to the lack of knowledge about the underlying fundamental value that a crypto asset might hold. Just like equities have various valuation models, even crypto assets can be valued based on novel metrics like using network fees as a proxy for cash flow. But most users continue to trade crypto like “penny stocks” and do not view it as an investment for long-term wealth creation.In fact, investing in crypto for a longer time horizon could be akin to early-stage venture investing, where the upside potential on investments can grow exponentially over time. Great examples would be Ethereum (in 2014) and Solana (in 2020), which had their public token launches at less than $1 and are currently trading above $3,000 and $140. The other approach is to let time do its magic because just like other asset classes, the power of compounding can create outsized returns and reward the patience of crypto investors. There’s a term for this amongst Crypto Natives: HODL or Hold On for Dear Life. The idea is that if you have taken a high conviction position in a fundamentally strong project and continue to hold that position over periods of high price volatility, you will be rewarded with exponential gains.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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Crypto

Bitcoin values hit record highs. Should you invest in cryptocurrency? Here’s how it works

Published

7 hours ago

November 24, 2024

Press Room

Bitcoin values hit record highs. Should you invest in cryptocurrency? Here’s how it works

If it seems everyone is talking about bitcoin these days, you’re onto something.

The digital currency has been hitting record highs and neared $100,000 this past week, having doubled in value throughout 2024. Launched in 2009, bitcoin is the first cryptocurrency, meaning that it’s a digital currency and does not rely on banks to verify transactions.

Bitcoin’s surge – up about 130% this year – is one of the “Trump trades,” market moves that have kicked in since former President Donald Trump’s victory in the Nov. 5 election.

Trump has dabbled in cryptocurrency – releasing crypto-based digital trading cards – and Trump Media and Technology Group, which operates Truth Social, is reportedly close to acquiring crypto trading firm Bakkt. The Trump family launched its own crypto firm, World Liberty Financial, in September.

Investors have wagered Trump’s support for bitcoin and other digital assets will lead to fewer restrictions on the industry. During the presidential campaign, Trump said he would make America the “world capital for crypto and bitcoin.”

Trump has tapped Tesla CEO and SpaceX founder Elon Musk to co-lead, with Vivek Ramaswamy, the new Department of Government Efficiency, or D.O.G.E. It’s an acronym for cryptocurrency called Dogecoin, which Musk supported as it became a phenomenon in 2021.

Been hit with the bitcoin buzz, but don’t quite understand it? Here’s some bitcoin basics.

What is bitcoin?

Bitcoin is a digital asset, launched in 2009 by a person or group known as Satoshi Nakamoto and designed to have a cap of 21 million bitcoin tokens. Bitcoin is created as crypto miners use their computing work to validate bitcoin transactions on its decentralized blockchain network, essentially a digital ledger meant to prevent fraud. As the crypto miners work, they earn bitcoin.

So far, about 19 million tokens have been released. In April, bitcoin underwent a “halving,” which kicks in about every four years to reduce the rate at which new bitcoins are created and released into circulation. As the bitcoin cap of 21 million tokens nears, demand likely increases, according to Investopedia.

Currently, a bitcoin is worth about $98,000. But the ownership of fractional shares of bitcoin is common, notes NerdWallet.

What are bitcoin ETFs?

It’s Trump’s interest in bitcoin alone that’s led to bitcoin’s climb. Earlier this year, the U.S. Securities and Exchange Commission voted to allow the sale of bitcoin-based exchange-traded funds, or ETFs, to the public.

That action allowed more investors to get into bitcoin in a similar manner to how they invest in stocks, bypassing crypto exchanges.

How does bitcoin work?

Like the dollar, bitcoin can be used as currency, but it’s virtual and isn’t controlled by banks or governments. While an entire bitcoin is priced at nearly $100,000, you can own partial shares of each coin. The smallest share of each bitcoin is called a Satoshi – after the cryptocurrency’s creator – equal to a hundred millionth of one bitcoin, according to NerdWallet.

You can buy bitcoin on a crypto exchange such as Binance.US, online stockbrokers including Fidelity and E-Trade, and trading apps like Robinhood.

If you buy bitcoin on a crypto exchange, you will create a “crypto wallet” to hold your bitcoin. If you invest in those bitcoin ETFs the SEC approved earlier this year, online brokers will hold your bitcoin in your brokerage account as any other investment.

What can I buy with bitcoin?

Pretty much anything. For instance, you can get a bitcoin debit card, which you load with a certain amount of your cryptocurrency holdings. That can be used as you would any debit card.

Beyond that, many companies now accept cryptocurrency for purchases including AT&T, Microsoft, Rolex, Time Inc., and Tesla, notes Investopedia.

You can buy “art,” too. That banana duct-taped to a wall, which sold last week for $6.2 million? The buyer paid in crypto.

What concerns are there about bitcoin and cryptocurrencies?

Back in 2018, investment guru Warren Buffett predicted that cryptocurrencies such as bitcoin, will likely “come to a bad ending.” His stance hasn’t really changed, reported Nasdaq.com.

But many point to the surge in bitcoin’s valuation as a sign the cryptocurrency has arrived. Anthony Scaramucci, founder of Skybridge and a former White House director of communications, has said Bitcoin could exceed $170,000 by mid-2025, and Ark Invest CEO Cathie Wood has predicted Bitcoin will hit $1.48 million by 2030, Fortune reported.

However, crypto exchanges can fail. The 2022 bankruptcy of the FTX cryptocurrency exchange resulted in customers losing $8 billion; founder Sam Bankman-Fried was sentenced to 25 years in prison in March.

Bitcoin values dipped after that, but have since risen to new heights – because, supporters say, as more people invest in bitcoin and other cryptocurrencies, the currencies become more stable.

Volatility can be seen as an advantage for those in search of future earnings – or as a disadvantage for those seeking somewhat stable investments.

“Remember that bitcoin and crypto are highly volatile, and may be more susceptible to market manipulation than securities,” notes Fidelity Investments in a primer for investors. “Crypto holders do not benefit from the same regulatory protections applicable to registered securities, and the future regulatory environment for crypto is currently uncertain.”

Maybe think about investing in bitcoin as you would joining the wave of online bettors. “If you decide to buy Bitcoin, it’s a good rule of thumb to invest only what you can afford to lose,” writes NerdWallet’s Kevin Voigt, “and take measures to protect your assets.”

Contributing: Daniel de Visé, Jessica Guynn, Max Hauptman, Jonathan Limehouse and Bailey Schulz of USA TODAY, and Reuters.

Follow Mike Snider on X and Threads: @mikesnider & mikegsnider.

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Crypto

Musk Tweet Sparks Dogecoin Surge, Fuels Speculation On X Payments

Published

16 hours ago

November 23, 2024

Press Room

Musk Tweet Sparks Dogecoin Surge, Fuels Speculation On X Payments

Dogecoin DOGE/USD experienced a 5% surge following a tweet by Elon Musk on X. This has sparked fresh speculations about the imminent payments service on Musk’s social app.

What Happened: Musk’s Friday post, which featured a screenshot of podcaster Joe Rogan’s X profile, triggered the increase in Dogecoin’s price.

The post displayed a unique dollar icon, different from the app’s tipping service, leading to speculations that it could be related to the anticipated X Payments service.

Musk responded to the speculation with a simple “true”, further fueling the rumors. Dogecoin’s price has historically been influenced by payment-related news from any of Musk’s ventures, including X, formerly known as Twitter.

There are speculations that once the service is live, it might support transactions with digital assets like DOGE, given Musk’s known fondness for the token.

Musk’s electric car company, already accepts DOGE payments for certain merchandise purchases in its online store.

Also Read: Dogecoin’s Active Users On The Rise, Will This Impact DOGE Price?

Over the past 24 hours, DOGE has advanced 6.16% and at the time of writing it was trading at $0.4332, outperforming the stagnant Bitcoin BTC/USD prices. The token has risen 190% over the past month, trading at its highest level since May 2021.

Why It Matters: The surge in Dogecoin’s price following Musk’s tweet is significant as it highlights the influence Musk has over the cryptocurrency market.

His tweet sparked speculations about the forthcoming X Payments service, which could potentially support transactions with digital assets like DOGE.

This is particularly noteworthy given Musk’s known fondness for the token and the fact that his electric car company, Tesla Inc., already accepts DOGE payments for certain merchandise purchases.

The rise in DOGE’s price also outperformed the stagnant bitcoin prices, indicating a growing interest in alternative cryptocurrencies.

Crypto

Bitcoin prices come within kissing distance of $100,000. Should you invest now or just sit on the fence? | Stock Market News

Published

24 hours ago

November 23, 2024

Press Room

Bitcoin prices come within kissing distance of 0,000. Should you invest now or just sit on the fence? | Stock Market News

Bitcoin prices hovered around $98,608 on Saturday on international exchanges, buoyed by the euphoria over Donald Trump-led Republican party reclaiming the White House. With its total market cap touching more than two trillion dollars, the oldest cryptocurrency has witnessed a spike of 51 per cent in the past one month.

There is hope that the Donald Trump-led US administration will adopt crypto-friendly policies when it takes over in January next year for its second term. The rally got further impetus when BlackRock’s spot Bitcoin ETF options were listed on Nasdaq on Tuesday.

Indian crypto industry insiders are naturally upbeat about this rally. Balaji Srihari, Business Head of CoinSwitch, says, “Bitcoin surged to an all-time high, signalling that the much-anticipated $100,000 milestone could be within reach- many analysts predict that this mark could be achieved as early as the end of November. Since the recent US election, Bitcoin has been consistently setting new records, encouraged by expectations of a more supportive regulatory framework and a potential national Bitcoin reserve; that can legitimise Bitcoin as a government-backed asset. BlackRock’s Bitcoin ETF debuting options trading on Nasdaq is a big sign of increasing crypto adoption.”

Apart from bitcoin, other crypto tokens too have witnessed a surge. XRP, for instance, has surged 188 per cent in the past one month, and 37 per cent in the past five days alone. Ether trades at $3,354 and BNB trades at $665 on Saturday, according to Coinmarketcap data.

Shivam Thakral, CEO of BuyUcoin, says, “In the last 24 hours, Bitcoin reached a record high of $99,000. XRP led the charge with a remarkable 25 per cent increase, driven by renewed optimism surrounding a more crypto-friendly regulatory environment in the US. It is anticipated that Donald Trump’s win in the election will drive the implementation of crypto-friendly policies, which will, in turn, enhance market sentiment. As trading volumes rise and hopes for ETF approvals increase, the future looks extremely positive for XRP and the wider cryptocurrency market as we near the end of the year.”

Vishal Sacheendran, Head of Regional Markets at Binance, says, “Bitcoin’s rally, fuelled in part by the optimism surrounding Donald Trump’s re-election, represents a transformative moment for the crypto and Web3 space. His administration’s support for digital assets could lead to more progressive regulations, fostering an environment conducive to greater institutional and retail investment in the sector. I believe that the broader crypto ecosystem could benefit from policies that promote blockchain infrastructure, and provide a better route for financial institutions to engage with crypto.”

Caution needed

Despite all the positive factors, crypto experts believe that investors should stay cautious and not get too carried away. It is common knowledge that bull runs are often followed by steep corrections. So, one should be cautious before getting too elated. “Amid the excitement, traders should stay cautious. Big price jumps often lead to sharp corrections, and using too much leverage could amplify risks during volatile periods,” says Srihari from Coinswitch.

“It is also important to note that in a bull market like this, investors should also remain mindful, conduct thorough research, and not make investment decisions solely based on market sentiment or hype,” adds Sacheendran of Binance.