It happened. After years of waiting, I put some money in Bitcoin and Litecoin the other day…here’s why and my thoughts on cryptocurrency values going forward. Snapchat / Instagram: GPStephan
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Here’s why I finally bought in and my thoughts going forward. When it came down to it, I just thought…why not. Let’s try this out. I wanted to get a firsthand experience of buying, selling, and holding cryptocurrency – just like in real estate investing, it’s one thing to have a textbook knowledge of it. You could point out every flaw, every investor psychology, everything that you “should” do…but until you actually do it, you don’t understand the full context behind it.
You might initially think that I’m flip flopping on my outlook and just following the herd and FOMO’ing in as a sheep, but my reasoning behind investing isn’t to make mad profit…although that would be nice. Instead, I’m using this as a learning experience to cryptocurrency in general. I’m pretty much just paying for an education in cryptocurrency and diving into what people are going through firsthand without the expectation of making a ton of money.
And it’s fun. I understand it. I’ve been up until 3am watching charts, reading forums, talking to you guys on snap/insagram…it’s a fun community of people with a similar interest and goal. I can see why the majority of people won’t be doing this until cryptocurrency gets much larger and more stable, and this leaves a lot of room for potential.
But there’s still a significant commonality I see between myself and many of the other more conservative investors out there who still haven’t invested and don’t plan on it. And that’s VALUE investing. In real estate, this takes into account current demand, how limited is inventory, what’s the cost to replicate this, what rent can I charge, and this has a direct utility – people LIVE in it. Just like investing in a company – what do they PRODUCE? What are their earnings? And how well are they valued?
This is the biggest difference I’m seeing. Even though I’m investing in cryptocurrency, I STILL can’t justify the value. I can’t see why Bitcoin is coming in on $20,000…nearly DOUBLE from what it was recently…as it is at $7000. Or $13k. Right now, the value is whatever we think it is rather than on the fundamentals. I understand the value from a psychological standpoint – there are MANY psychological price barriers when it comes to cryptocurrency, and I get the future aspirations of it becoming more and more mainstream, but literally everything I’m seeing is speculation. It’s investing with the expectation that it’ll be worth more in the future.
Now, we can compare Bitcoin to every other market and see “in relation to this, it’s undervalued.” But right NOW I can’t see the functionality justifying a 100% price increase in a few weeks…functionality and use of bitcoin didn’t just go up nearly 100% in 2 weeks, but media attention and excitement of future profits did.
This isn’t even to say that bitcoin is the best coin…honestly, so many other coins have way more potential. But Bitcoin remains the top dog for its mainstream popularity, even though I believe in other cryptocurrencies way more.
But, I can’t see any type of fundamentals justifying these prices right now…and now I can say that while having money in it. And maybe one day, but in order for this to sustain itself, we either need way more mainstream adoption or for people to continue buying it higher and higher with the expectation that someone else will continue buying higher.
So my recommendation? Invest what you can afford to lose. I invested an amount where it won’t make a difference to me if it drops significantly. I’ll more than likely continue playing around with crypto and HODLing, because I have a pretty positive outlook on cryptocurrency in general, but I’m only buying in as fun play money to learn more about it.
Oh and because every video I make about not buying, it goes up 100%+ or more…expect that once I post this about BUYING, it’ll drop a ton. Just my luck.
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