Broader Institutional Cryptocurrency Adoption
Mainstream companies across industries have taken interest and in some cases themselves invested in cryptocurrency and blockchain in 2021. AMC, for example, recently announced it will be able to accept Bitcoin payments by the end of this year. Fintech companies like PayPal and Square are also betting on crypto by allowing users to buy on their platforms. Tesla continues to go back and forth on its acceptance of Bitcoin payments, though the company holds billions in crypto assets. Experts predict more and more of this buy-in.;
Weve seen a tremendous amount of inflow of attention, and thats going to continue to drive the growth of the industry for a while now, says Abner.;
Some experts predict bigger, global corporations could jumpstart this adoption even more in the latter half of this year. What were looking at is institutions getting involved in crypto, whether its Amazon or the big banks, says Weiss. A huge retailer like Amazon could create a chain reaction of others accepting it, and would add a lot of credibility.
Indeed, Amazon has recently sparked rumors that its making moves to that end by sharing a job posting for a digital currency and blockchain product lead. Walmart is also recruiting a crypto expert to oversee its blockchain strategy.;
The Golden Age Of Investing In Digital Currencies Has Just Begun
- Ethereum runs the blockchain of choice for decentralized applications.
- Cardano is rapidly gaining traction as a fast and efficient smart contract network.
- Binance Coin commands decentralized finance projects worth nearly $50 billion.
Rarely has there been a more clear-cut case of free-market economics than in the blockchain cyberspace. For example, the decentralized finance industry has grown to $80 billion in total value locked during 2021 from next to nothing a few years ago, due in part to the absence of regulations. Moreover, that number is projected to increase to as much as $800 billion in 2022.
So without further ado, let’s look at how three high-flying cryptocurrencies can add wealth to your portfolio. These altcoins — meaning crypto other than Bitcoin — are Ethereum;,;Cardano;, and;Binance;Coin;, respectively. In the past four years, ETH — the biggest of the three — has gained more than 1,000%, Cardano has returned almost 9,000%, and finally, Binance Coin takes the podium with a mouth-watering return of more than 32,000%.;
Ethereum & Bitcoin Suffer Setbacks
Ethereum came under significant pressure last week as its value collapsed midweek. The cryptoasset fell sharply on Wednesday 7th July, from trading around $2,350 to now hovering just over $2,150.
Bitcoin similarly suffered a midweek slump but has since recovered some of its losses. The worlds largest cryptoasset spiked to $34,802 but failed to breach $35,000 during the course of the week. It fell as low as $32,406 on Wednesday but has now recovered to trade around $34,000.
Both cryptoassets have been hit by crypto crackdowns in China and regulatory changes in different jurisdictions around the world. The ethereum hash rate, which measures the overall computing power of the network, has fallen by 20% since May reflecting the increased pressure faced by market participants.
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Are Cryptocurrencies A Good Investment
Cryptocurrencies may go up in value, but many investors see them as mere speculations, not real investments. The reason? Just like real currencies, cryptocurrencies generate no cash flow, so for you to profit, someone has to pay more for the currency than you did.
Thats whats called the greater fool theory of investment. Contrast that to a well-managed business, which increases its value over time by growing the profitability and cash flow of the operation.
For those who see cryptocurrencies such as bitcoin as the currency of the future, it should be noted that a currency needs stability.
Some notable voices in the investment community have advised would-be investors to steer clear of them. Of particular note, legendary investor Warren Buffett compared Bitcoin to paper checks: It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money? Just because they can transmit money?”
» Learn more:;Is Bitcoin safe?
This price volatility creates a conundrum. If bitcoins might be worth a lot more in the future, people are less likely to spend and circulate them today, making them less viable as a currency. Why spend a bitcoin when it could be worth three times the value next year?
Safemoon $000000728 $4263525377 Market Cap
An altcoin that promises to take you to the moon, Safemoon has already spawned numerous imitators and scam coins which have already been rug pulled. Safemoon, for now, seems to still be going ok. It also has an interesting premise where selling involves a tax, which grows the liquidity pool and incentives investors to hold.
As Astropup shows, after a recent rogue developer allegedly sabotaged the whole thing, a project like this can talk a big game but in the end you are at the mercy of the developers and leaders. Safemoon appears to be going ok and is a very interesting project. But as always be smart and never assume you will be getting your money back. Some crypto influencers have called it a scam, others say they dont care and they are happy to ride the wave and take their chances.
Summary: interesting, quirky, catchy name, tokenomics mean it could keep growing for a while longer, in theory
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Are There Cryptocurrency Exchange
Given the thousands of cryptocurrencies in existence , its understandable you might want to take a diversified approach to investing in crypto to minimize the risk you lose money.
Multiple companies have proposed crypto ETFs, including Fidelity, but regulatory hurdles have slowed the launch of any consumer products. As of June 2021, there are no ETFs available to average investors on the market.
Redfox Labs $0241 $3332 Million Market Cap
Setting up in Vietnam, this Australian-owned token on the Ethereum network promises to be usable across a number of digital services. Effectively powering an ecosystem, RFOX will be able to be used in a tournament-based video game, will be a marketplace for non-fungible gaming tokens and will also be able to be used to buy virtual land.
Already making acquisitions, and choosing Vietnam because of its potential for serious growth in South East Asia , RFOX is being described by many as one of the next $1bn projects.
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Should You Buy When Prices Are Lower
Cryptocurrency has always been volatile, but it’s experienced quite the wild ride over the past few months. After shattering records and reaching staggeringly high prices, cryptocurrencies have taken a sharp turn for the worse.
Bitcoin, which reached a high of around $65,000 per token last month, has fallen by more than 30% over the past 10 days, as of this writing. Other popular cryptocurrencies Ethereum and Dogecoin are also down around 30% over the same time period.
Sometimes, market crashes are beneficial to investors because they’re an opportunity to buy stocks at bargain prices. If you’ve been eager to invest in cryptocurrencies but are hesitant about the sky-high prices, a crypto crash could make them more affordable. But does that mean you should invest?
Choose Your Crypto Carefully
If you decide to invest in cryptocurrency, buying when prices are lower may be a wise move. Especially if you’re investing in a higher-priced currency like Bitcoin, you can get more for your money when buying during a downturn.
Just be sure you’ve done your research before you invest. The fact that a cryptocurrency is more affordable doesn’t necessarily mean it’s a smart investment, so consider all your options before you buy. The goal is to buy investments you can hold for the long term, so make sure you’re choosing the right cryptocurrency for you.
Bitcoin is the biggest name in the crypto space, and it’s also the oldest cryptocurrency. This gives it a leg up on the competition. However, it’s an energy-intensive cryptocurrency, which poses environmental concerns. In fact, Tesla CEO Elon Musk recently announced that the company would no longer accept Bitcoin as a form of payment because of its environmental impact.
Ether is the second-most popular cryptocurrency, and it uses the popular blockchain Ethereum — which is also the blockchain behind non-fungible tokens and . Because the Ethereum blockchain has a variety of uses, that gives it an advantage. In addition, developers are currently working on Ethereum 2.0, which will be more energy-efficient and environmentally friendly.
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How To Invest In Both Bitcoin And Ethereum
Even if you choose to buy both Bitcoin and Ethereum, your personal financial goals and knowledge of cryptocurrency can play a big part in how much of your money you allocate to each coin. If youre going to split your investment, Subramaniam recommends a 60/40 split and Sterling recommends an even 50/50 split.;
You can also consider investing with a weighted market cap strategy by putting your proportional investment into each asset based on market cap, says Schneider. For cryptocurrency, market cap refers to the total market value of all of the coins that have been mined. If youre starting with $100 and want to invest in Bitcoin and Ethereum, that would be $71 in Bitcoin and $29 in ETH based on their current market caps.
Schneider also recommends using this strategy if you plan to diversify into more coins in the future. For example, a 10-coin $100 portfolio based on market cap, would look like this:
- Bitcoin 54.4%;
How Ethereum Is Different From Bitcoin
As we mentioned above, Bitcoin was designed to be a currency. It uses the same underlying technology principles, but uses them to facilitate monetary transactions.
Ethereum, on the other hand, was designed to facilitate software processing using a token system called Ether. That Ether has become more valuable as a result of people becoming interested in the technology. That Ether is what people want to invest in.
However, there are a lot of apps being developed on Ethereum, and even some major financial companies are getting involved in the space. It could be interesting to see what develops from this over the next few years.
Ethereum is also the basis for transacting in NFTs and other collectables online. So, if you want to buy an NBA Top Shot or other NFT, you need ETH.
Finally, Ethereum is much cheaper than Bitcoin. Bitcoin currently trades for over $40,000 per unit, while Ether trades at just $2,000.
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Do You Have To Pay Taxes On Cryptocurrency
If you buy and sell coins, its important to pay attention to cryptocurrency tax rules. Cryptocurrency is treated as a capital asset, like stocks, rather than cash. That means if you sell cryptocurrency at a profit, youll have to pay capital gains taxes. This is the case even if you use your crypto to pay for a purchase. If you receive a greater value for it than you paid, youll owe taxes on the difference.
Is Bitcoin Bad For The Environment
The digital currency uses as much power as the Netherlands every year, with just 30 countries using more energy, according to researchers from the University of Cambridge.
Computers that mine bitcoin use up to 1% of the worlds electricity supply.
While some of bitcoins consumption is renewable , fossil fuels are still being used to power the mining and servicing of the digital currency.
This is why electric car manufacturer Tesla has stopped accepting crypto payments, causing bitcoin to fall.
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Rising Stars: Return Of The Quality Cryptocurrencies
Though crypto doubters might roll their eyes at the concept of a high-quality cryptocurrency, these unicorns do exist, at least in relative terms. Scalable coins with efficient, dedicated networks have far more real-world use than copycat tokens that rely on Twitter marketing.
In a sense, this strategy is one InvestorPlace crypto expert Charlie Shrem has been talking about ever since creating one of the worlds largest Bitcoin exchanges. Charlies more of a buy-and-hold-for-3,000%-gains investor than a tactical trader .
But Im following his lead now that quality cryptocurrencies have broken out of their three-month hibernation. So today, Im adding three more high-quality altcoin plays to my long-term buy list.
ICP remains one of my favorite dark-horse candidates for the next Bitcoin crown.; The cryptocurrency network retains backing by Andreessen Horowitz, one of the most prestigious venture capital firms in Silicon Valley. And its focus on using blockchain for cloud computing means its an altcoin with fascinating and widespread use cases.
Its hard to forget ICPs early failures. This former No. 8 cryptocurrency lost nearly 95% of its value after parent firm Dfinity quietly allowed the treasury and insiders to send billions of dollars of ICP to exchanges, per crypto analysis firm Arkham Intelligence.
Wait how is Robinhood an altcoin play?
Closing Thoughts: Thinking Of Buying Bitcoin For Safety
It Isnt as Low-Risk As You Think
Most non-crypto investors see Bitcoin as the gold standard for cryptocurrencies. After all, the worlds oldest coin makes up almost half of the crypto market.
But look closer, and Bitcoin has risks that novice investors might overlook.
First, most of the 19 million Bitcoins in circulation never trade hands. A study by blockchain analytics firm Chainalysis found that around a fifth of all Bitcoin addresses are dormant likely owned by people who lost their passwords or forgot about the account. Another 60% of Bitcoins are held in accounts considered illiquid, according to analytics firm Glassnode.
Secondly, many Bitcoin traders are using 100-to-1 leverage or greater for trading. FINRA margin rules dont apply to cryptocurrency.
Finally, whales, miners and exchanges own over half of all Bitcoins. Ownership is highly concentrated for an asset that size.
In other words, Bitcoins value is largely dictated bya handful of traders speculating on just four million coins. On average, BTC moves 3% per day, not far from Dogecoins 4.5%. Meanwhile, its upside remains limited for reasons we discussed earlier.
So those looking for safe returns are better off buying an ancillary crypto play like PayPal or Coinbase. Because when your cryptocurrency is worth almost twice as much as those two companies put together, it takes a lot of rocket fuel to lift your holdings to ever-growing heights.
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The Future Of Cryptocurrency
We can speculate on what value cryptocurrency may have for investors in the coming months and years , but the reality is its still a new and speculative investment, without much history on which to base predictions. No matter what a given expert thinks or says, no one really knows. Thats why its important to only invest what youre prepared to lose, and stick to more conventional investments for long-term wealth building.;
If you were to wake one morning to find that crypto has been banned by the developed nations and it became worthless, would you be OK? Frederick Stanield, a CFP with Lifewater Wealth Management in Atlanta, Georgia, told NextAdvisor recently.;
Keep your investments small, and never put crypto investments above any other financial goals like saving for retirement and paying off high interest debt.;
How Does Trading Cryptocurrencies Differ From Stocks
While you can invest in cryptocurrencies, they differ a great deal from traditional investments, like stocks. When you buy stock, you are buying a share of ownership of a company, which means youre entitled to do things like vote on the direction of the company. If that company goes bankrupt, you also may receive some compensation once its creditors have been paid from its liquidated assets.
Buying cryptocurrency doesnt grant you ownership over anything except the token itself; its more like exchanging one form of currency for another. If the crypto loses its value, you wont receive anything after the fact.
There are several other key differences to keep in mind:
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Shiba Inu $000001563 $6179710644 Market Cap
After Dogecoins heroic spikes people started looking for the next Dogecoin. Plenty of developers have tried to riff off it . Shiba Inu is arguably the catchiest riff right now .
We cant tell you how trustworthy Shiba Inu is . But at least he is doxxed . Buterin was a co-founder of Etherium and was gifted half of SHIBs token supply by the anonymous founder of Shiba Inu , according to SHIBs white paper.
Buterin recently donated a huge number of Shiba Inu to help support Indias Covid relief. This caused panic among investors, but could win more new investors over in the long run. Time will tell if Shiba Inu spikes again.
Its also worth noting Binances Indian exchange listed Shiba Inu a day after Buterins billion dollar donation .
Summary: Shiba Inu claims to be the Dogecoin killer. No guarantees this will prove true, but with the hype around, if you can afford it, could be fun for a flutter. Could also be a good chance now to buy the dip. If you missed getting in early on Dogecoin, maybe this is your chance.
Bitcoin Vs Ethererum Price Over Time
Note: Based on CoinDesk historical data using Bitcoin and Ethereum closing prices since 2015
Im a big believer that you should understand what youre investing in, instead of just putting your money where everyone else is telling you to put it, says Humphrey Yang, the personal finance expert behind Humphrey Talks.;
Beyond the technical differences in the two cryptos, Bitcoin and Ethereum offer two completely different value propositions for investors, which could be the deciding factor for you.
I think depends on what you believe is more important in terms of the underlying value that Bitcoin and Ethereum provide. While they are cryptocurrencies, I believe both serve two different purposes that everyone will have different opinions on, says Dan Herron, a CPA with Elemental Wealth Advisors.
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