I don't invest in any crypto, I treat it like a trade, not an investment vehicle.
Currently we are in yet another crypto bubble and I would say the entire financial market from stocks to real estate to crypto is ALL in a giant bubble.
We have had
investors put more money into stocks in the last 5 months than in the previous 12 years combined!!! (published April 9th, 2021)
Not to mention real estate, which everyone knows prices are sky high almost everywhere, despite the fact that home ownership rates really haven't risen
that much, (they've gone from 63.7 in 2016 to 65.8 in 2020. This is due to the MASSIVE influx of investors trying to make their fast money and massive returns in real estate.
Same goes for crypto, everyone is trying to make a quick buck. There are a few different types of people playing crypto:
1. Those that are treating it like the lottery, putting up money they really can't afford to lose in the hopes that it will blow up in value and they're take 10 years off their retirement timeline...but then as soon as it goes down in value their weak hands give out and they sell out of fear.
2. Massive investors (whales) and institutions that are pouring large amounts of money, also in the hopes of creating massive returns for themselves or their investors. Most of them are treating this like they should, a risky asset class that could go bye-bye, but if they do well then that's gonna be great for them.
3. Regular people who are just putting up normal amounts of money in the hopes that they get lucky, but if they lose it it's really no big deal.
I traded crypto from 2015 to 2018, then sold almost all of it during the 2018 bubble.
The problems I see with crypto are:
1. Really, why? People go on these tirades about decentralization and sticking it to the banks and whatnot, but honestly, 99.99% of them are buying crypto with their bank account in a non-anonymous fashion and (hopefully) reporting their returns to the IRS. In the end the banks and large corporations run the world, and bitcoin or anything else isn't gonna change that. The MAIN beneficial use case I see is for immigrants and international peoples to send money back to their families in a MUCH, MUCH cheaper way. Crypto fees can be high (cough BTC sucks), but international bank wires are usually even higher. And obviously the other use case is buying drugs and illegal stuff.
People can buy a tesla now with their bitcoin? Who the fuck cares. It's a luxury car built by an overvalued company with an asshole-narcissist-billionaire CEO who pumps crypto (and almost certainly benefits on the backend). Oh, you can buy your pizza or furniture with bitcoins? Honestly, all you are doing is racking up extra fees by having to convert from fiat to crypto, withdraw from exchange, then send the money. If you just write a damn check instead you can avoid literally thousands of dollars of fees (if you're buying a tesla, although a model 3 might be under $1,000 in fees, idk).
99% of crypto tx's are not anonymous. Bitcoin is traceable. Litecoin, Ether, Cardano, you name it (not Bytecoin or Monero, maybe not Dash or ZCASH, but I am not really sure).
2. Electricity/carbon footprint.
Bitcoin alone has a carbon footprint equal to New Zealand. It's estimated that a
single bitcoin transaction uses the same amount of electricity as Visa deploys in processing as many as 735,000 credit and debit card purchases. It's only going to get worse as mining rewards halve and mining difficulty increases and more people use it.
3. Bitcoin sucks, the tech is old and slow and expensive, there are so many WAY better coins out there, but Bitcoin has the name recognition. That to me is some measure of proof that this is a huge bubble. The coin isn't valued based off its utility or its efficiency or anything, it's valued based off speculation. People think it's worth something, so it's worth something. Litecoin, Ether, XRP, even Bitcoin Cash is faster and more efficient. But Bitcoin is king because that's the way it is and it's what people think of when they think of crypto.
4. Regulation. First off, reporting crypto on your taxes in the US is a huge pain in the fucking asshole. It sucks balls. The IRS's fucking stupid rules that you have to report on every single swap, not just when you cash in/cash out, is stupid as all hell. Then you have China which just released their own cryptocurrency and will likely move to ban all other cryptos at some point in the future. Meanwhile, as US GOP senators move to
ban all encryption (fuck the GOP god dammit), would that then make cryptocurrencies illegal? What would the impacts be there? Now that the financial institutions and billionaire-class are into it, I highly doubt they would move so drastically, but who knows what will happen.
So yeah, IMO crypto isn't a real long term investment. I would never buy a significant amount (more than a few thousand dollars is what I would consider a significant amount) of any crypto and plan to HODL it until it hits the moon.
Like literally
anything where people can make money nowadays, crypto is oversaturated, overinflated, and VERY bubbly/frothy. Whether it is youtube channels, onlyfans/pornhub amateurs, MLM schemes, being a DNM drug dealer, investing in real estate, scalping PC parts, trying to find a GOOD entry level job in most fields, mining or investing in crypto has just gotten to be too saturated. The entry price has become a barrier for the exact types of people crypto could have served best. The god damn ultra wealthy and big corporations got their hands on it and now it costs over $50k, which is almost twice the real median salary for a year of work in the United States...honestly at this point I hope the regular Joe's sell off and let this stupid flaming pile of shit crash miserably so the banks and billionaires can watch their money dwindle away.
I would much rather buy a property, which has actual tangible value. Yes, real estate markets are volatile to some degree as well, but as long as you buy right and don't overleverage/overextend yourself, you should have a cash flowing property that you can hold on to and coast with for years until you want to sell and capture your gains. Yes, real estate is highly saturated, but you have control over the asset and it isn't valued based off speculation like crypto is. IMO real estate in the form of rental properties with a value-add component are the ultimate investment vehicle. That said, I made a killing off crypto in 2018 and I still do hold some that I just kept as part of "playing with house money." I also trade penny stocks and invest is long term, "stable" assets with my IRA and 401k.
Diversify your investments. TAKE GAINS WHEN YOU CAN. Cover your fucking ass/initial position. if you put $3000 into XMR and it doubled, sell half of it and get your initial money back. Then you're playing with house money and don't have to be concerned if you lose it (although it still sucks watching the money go bye-bye).
