Should I invest or NOT in Bitcoin, Ethereum, and other cryptocurrencies at these valuations
Many people pose this question to me. Is this the right time to invest in crypto markets?
This question has two different answers:
- Yes, if you are long term investor and are a short-term risk-averse investor- i.e you do not want to cash out for atleast 10 years, you can invest in it anytime.
The market for cryptocurrencies is maturing, and as with any new global socially engageable technology cryptocurrencies are just percolating the markets. Less than 1% of people in developed economies own any form of cryptoassets, and, even lesser number of people in developing economies own or trade in cryptocurrencies. It will take atleast 5 - 10 years for this number to grow to a critical limit of tractability. In technical terms the adoption is at its initial stages.
- No, if you are are a short-term investor - meaning you are looking to cash out before those 10 years with your profits.
There is no certainty of profit, and given investor psychology you will continue to hold till a point. Cryptomarkets are extremely volatile. While on one hand, one can see growths of 1000% in a years time, there have been instances when the value dropped 80% within 1 week (e.g. Mt. Gox hack). Such extreme swings are usually expected because this is a global unregulated market of an asset class that is not backed by any physical asset.