Bitcoin has recently toppled November 2021’s high of around 67K to USD 69,202.00 and currently sits at $63,726.70 which according to savvy cryptocurrency investors is due to US SEC approving bitcoin ETFs in January 2024. Their excitement has brought out of the bag exactly the kind of wannabee investors crypto-psychos love!
ETFs are Exchange Traded Funds which diversify risk by creating a portfolio that can span multiple asset classes, sectors, industries, and security instruments and then the risk is concentrated in the overall stock's performance.
This is good news to spread out part of your investment in the cryptocurrency market. However, if used solely to invest in crypto fund ETFs then the volatility is just the same.
Investing in cryptocurrency ETFs (Exchange-Traded Funds) can be a good decision for some investors, but it's important to understand the risks and potential benefits before making any investment decisions. Here are some factors to consider:
Diversification: Cryptocurrency ETFs can offer diversification by providing exposure to multiple cryptocurrencies within a single investment vehicle. This can help spread risk across different assets.
Regulatory Environment: The regulatory environment for cryptocurrency ETFs varies by country. Some countries have approved cryptocurrency ETFs, while others have not. Investors should be aware of the regulatory landscape in their jurisdiction.
Volatility: Cryptocurrencies are known for their high volatility. While this can lead to potentially high returns, it also comes with increased risk. Investing in a cryptocurrency ETF may help mitigate some of this volatility compared to investing in individual cryptocurrencies.
Fees: Like any investment, it's important to consider the fees associated with cryptocurrency ETFs. These can include management fees, trading fees, and other expenses. High fees can eat into investment returns over time.
Market Performance: The performance of a cryptocurrency ETF will depend on the performance of the underlying assets it holds. Investors should carefully research and analyze the market dynamics of the cryptocurrencies included in the ETF before investing.
Long-Term Outlook: Consider your investment goals and time horizon. Investing in cryptocurrency ETFs should be viewed as a long-term investment strategy, and investors should be prepared for potential fluctuations in the value of their investment over time.
Security: Ensure that the ETF provider has robust security measures in place to protect investors' assets from theft or hacking.
Ultimately, whether investing in cryptocurrency ETFs is a good decision depends on individual circumstances, risk tolerance, and investment objectives. It's recommended to consult with a financial advisor or conduct thorough research before making any investment decisions.
Savvy crypto investors play the market buying low and selling high. It doesn’t take much to send the cryptocurrency market crashing down though based on market conditions, so it might be as well to ask yourself how much are you prepared to lose before investing in any type of ETF. Just in case!
If the crypto fund includes IPOs (Initial Public Offering) then these funds are even more risky, so due diligence is fundamental before risking your hard-earned money.
Actually, we've seen Bitcoin shoot up to 73k the following week from writing this article, and according to statistical experts and the prediction table, by 2031 they'll be worth $1,359,691.02.
Easy money usually means a scam, so tread carefully!
All the best!
Prof. Carl Boniface
Vocabulary builder:
Toppled (v) = collapsed, fell, fallen, tumbled, upset, fall over, tip over, knock down, knock over, overthrew
Wannabee (n) = a person who tries to be like someone else or to fit in with a particular group of people. "a star-struck wannabe" or (adj) = aspiring or wanting to be a specified type of person. "a pair of wannabe pop stars" Think of ‘want to be’!!!
Psychos (n) = an unstable and aggressive person. "My ex is a total psycho" Informal (adj) = exhibiting unstable and aggressive behavior.
"There's some kind of psycho shark out there"
Mitigate (v) = alleviate, lessen, ease, moderate, diminish, dull, soften, relieve, mollify, assuage