I’ve long-feared that I’d missed the opportunity to get involved with crypto. I couldn’t quite understand exactly what it was or how it worked. For many years I convinced myself it must surely be a scam dreamt up by people way cleverer than me.
Years have past and in spite of my inaction, I’ve maintained a passing interest in cryptocurrency while regretting daily that I didn’t own any.
While there have been numerous high profile booms and busts in the value of Bitcoin (the largest and best-known cryptocurrency), it seems apparent that it’s here to stay. When investing heavyweights like hedgefund manager Paul Tudor-Jones writes to his investors sharing his belief in Bitcoin as an investment vehicle it would seem silly to ignore him.
And so it was that by luck and coincidence that on January 2nd 2021, I decided to do what I could to make a small investment in Bitcoin.
Before I dive into how it went, I need to point out that this isn’t an in-depth, fully-researched piece describing everything you need to know about Bitcoin. Nor does it represent qualified financial advice. What I’m sharing is the process I went through to invest in Bitcoin from beginning to end.
If you’ve been procrastinating as I had, you may just find this gives you the impetus and information you need to get started. At the very least I want to debunk the myth that there are complicated and costly barriers to overcome if you want to get into Bitcoin. The rest of the considerations (like the psychology and strategy of investing) are up to you to make!
I’m a forty-something guy living in the UK who has witnessed many bubbles, booms and busts during his lifetime.
Some of these I’ve capitalised on — the dot-com boom paid the deposit on my first house. Others left me behind — the money that I wasted on consumer goods and needless toys could have secured me shares in Apple, Amazon or Facebook at a bargain price.
Until recently I put cryptocurrency into the category of bubbles that I’d also missed — opportunities that passed me by. I read of meteoric gains in value and envied those who’d had the courage and foresight to get involved. When the price crashed I felt smug for not wasting my time but still suspected deep down that I was missing the opportunity to buy in when prices were low again.
The other barrier to getting involved besides grit was the technical steps that I’d convinced myself were too great to overcome.
And so I procrastinated, delayed and tried to deny my own interest and the sense in my gut that if I didn’t get involved that in the years to come I’d regret my inaction even more.
On the first Saturday of 2021 for no real reason I finally decided to take the plunge.
I had £100 that had been given to me for Christmas and no desire to send it all to Amazon in exchange for yet another brown parcel full of things I didn’t need. Instead, I determined I’d buy my first Bitcoin.
Little did I know that-that same day would see the value of Bitcoin climb to its historic high, a rally that would return a 3% gain in one day. Nor did I realise it would continue to climb to $34,000.
My goal first and foremost was to find the quickest, simplest way of investing in Bitcoin in a risk-free way and with as little up-front expenditure as possible. I wanted all of my £100 to go towards Bitcoin rather than in fees or on specialist hardware.
When I say risk-free I’m mindful that risk is inherent in all investing, particularly with volatile investment vehicles like cryptocurrency. In this context I merely wanted to avoid scams or rogue-processes that might end up costing me more than I had to stake.
As to the risk that my initial investment and subsequent gains may lose value, well I’m prepared for that as a possible, if not a likely outcome.
My strategy for Bitcoin was that if I could figure out how it worked, I would drip in a small amount of money regularly to build up my investment in Bitcoin over the coming year. I want to have at least a little skin in the crypto currency game and to experience a small share of whatever gains and losses might be made in the future.
I’m a buy-and-hold investor risking a relatively small sum of money that won’t destroy my life or that of my family if I lose it all. I’ve no intention of day-trading or trying to predict fluctuations in price to make money off those. To that end, the majority of my modest investments remains in index-tracking managed funds and my pension. Neither of these will ever be replaced by or linked to cryptocurrency.
I started where all good research projects begin — on YouTube. I’d heard of Coinbase before as a reputable cryptocurrency exchange and so sought out a couple of tutorial videos on how Coinbase enables the purchase of Bitcoin, starting with this one.
I separated learning how to buy Bitcoin from the technical intricacies of what it is and how it works. For the purposes of this experiment I focused solely on turning my £100 into the equivalent value of Bitcoin. It’s my intention to learn more about the technical side of things later on.
It seems that to buy Bitcoin (or any widely-known cryptocurrency) you need the following:
1) An account with a (hopefully) reputable crypto intermediary — This enables you to deposit your funds (in my case £GBP) and to receive your Bitcoin once purchased.
2) Access to a Crypto-Exchange — this is essentially an interface to a marketplace where buyers meet sellers and vice-versa to deal in cryptocurrency, like any stock market or currency exchange. I’ve split this from Point 1 above for the purposes of describing the process I went through, but it’s really part and parcel of the same thing.
3) A Crypto-wallet — A secure place or device that is logically and physically separate to the Crypto-Exchange where you can hold your Bitcoin once you’ve bought it.
I’ve included links to the specifics of what I used below in case you want to follow the same approach. You are of course free to do your own research (and indeed I’d suggest you do so). I’m sure there are many alternatives to each of these that may be better in many respects.
I took the view that I’d not waste time at this point trying to save pennies in fees or look for other reasons to end up in analysis-paralysis. I simply wanted what was safest, most reputable and quick to set up and use.
To reiterate, the advice that I encounter regularly when reading anything to do with crypto and Bitcoin is to do your own research — so I heartily recommend that you do just that!
As mentioned above, I came to crypto investing having pre-selected Coinbase and a little further background research gave me reassurance and comfort — Coinbase was founded by (amongst others) a former Goldman Sachs trader in 2012. They are the leading Crypto-exchange in the USA too, by trading volume which gave me confidence that I’m among many other likeminded souls.
Given that my main concern was about security and the prospect of getting ripped-off it seemed like a smart move to go with the biggest player in much the same way that my first ever online book purchase was made via Amazon (back in 1998 as I recall — a tale that reminds me just how old I really am!)
Rhetoric that Coinbase’s fees are relatively high didn’t put me off — I ended up paying pennies to buy my £100 of Bitcoin via Coinbase end-to-end. I was also pleased that there seemed to be no significant minimum investment which I was relieved about — another potential barrier lifted.
The sign-up process took minutes and completed while waiting for my morning coffee to brew. This included scanning and uploading ID for age and address verification purposes which was all done securely, online and in minutes.
With the account set up and the app downloaded on my iPhone I was ready to add funds and make my investment.
Your funds for investment can be sent from a bank account electronically or you can fund your Coinbase account via a credit or debit card. In the tutorials I watched there was a suggestion that some banks and card providers don’t allow the funding of crypto accounts using their products. I assume this is a means of preventing some from getting in over their heads and maxing out their credit card in search of crypto riches?
In my case, an electronic bank transfer from my checking account to Coinbase was quick, easy and free. With the account set up and funds added I was ready for the next step.
Without any further steps required, a funded Coinbase account will allow you to buy your Bitcoin (or any other cryptocurrency). The interface is as simple as any well-designed online shop and most who have shopped online will be able to buy via Coinbase alone.
At the simplest level, you enter how much of your initial funds you want to invest at the current market price (which is fluctuating by the second). When you submit your request to deal, Coinbase will display the fees you’ll incur which are of the order of a few pennies for a £100 trade.
The tutorials I watched pointed to Coinbase Pro as a more involved and intricate Coinbase experience which links seamlessly, and uses the same credentials as Coinbase. Through the use of Coinbase Pro, fees can be reduced and curious souls like myself are able to be a bit more ‘hands-on’ with how they execute their trades.
While I’m not an expert trader I was drawn to this as I have in the past dabbled (very unsuccessfully) with spread-betting on foreign exchange currency pairs. While the venture was a dead-loss of the money I staked, I learned a lot at the time about trading charts, submitting sell and buy orders and so-on.
I decided to investigate it, and ultimately downloaded Coinbase Pro and used it to complete my Bitcoin trade. If you’re looking to make your first trade without such a step then you probably don’t need to follow the remainder of this step and can just execute your trade via the non-pro version of Coinbase!
In my case, I funded Coinbase Pro by transferring my £100 into it from Coinbase (which is again fee-free).
I wanted to use a limit order to buy my Bitcoin which means I specified the price I was willing to pay rather than proceeding direct to buy at the prevailing market price. This reduced the fees slightly. It also made me feel like less of a rookie and inflated my ego a little!
I set a price of a few dollars beneath the market price at that moment and submitted my order. A couple of seconds after submitting my order it was fulfilled and I was the proud owner of a little over four thousandths of a Bitcoin!
The story could end here since I now owned the Bitcoin.
Recommended best practice however is that investors are unwise to leave their Bitcoin to reside on the Crypto Exchange. Instead, it’s advised that the coins (essentially a unique and encrypted code that constitutes the coin) are moved or downloaded and stored securely on a Crypto Wallet.
The rationale is that hackers are more likely to target exchanges rather than individuals’ wallets, hence there’s no sense in leaving your coins in the exchange account to potentially be lost. There is also a reliance on the exchange organisation remaining in business — if coins were left on the exchange and they went bust, then I guess it would be a nightmare to retrieve ones investment.
Crypto wallets are the answer to this.
They are software or hardware-based devices, designed to be ultra-secure and independent of the exchanges themselves. Many remain offline and unconnected to the Internet except when the owners are accessing them to trade or spend their coins, or want to add more to their wallet.
I did a little more research, and in-line with my ‘zero-spend’ principle opted for a software app-based wallet rather than buying a hardware wallet (think along the lines of a removable hard-drive or USB Memory Key). For simplicity I used the Coinbase Wallet App.
I’ve done more research since, and I’ll likely purchase a hardware wallet like the Trezor One, many of which are priced at less than $100. A hardware wallet gives the coin owner ultimate control and ownership of the private key which remains online in a software wallet.
By storing your Bitcoins in a secure, encrypted wallet the already secure and encrypted coins themselves are placed under further protection. You’d keep an eye on your wallet if you’d just filled it with cash, so why not treat your cryptocurrency with similar care?
It seems to make sense in a world where we’re opting out of the banking system providing that protection on our behalf that we would want to ensure we provide our own protection, right?
The follow-on from this would then presumably be “How and where do you then store and protect the wallet?”
Mine is accessed via a highly-secure app on my iPhone and as and when I get a hardware wallet I suspect I’ll want to keep that in a safe or strongbox. When I have enough Bitcoin on it to warrant such security measures then I’ll gladly consider the matter further as it will signify something worth protecting!
For now, the Coinbase Wallet links seamlessly to the Coinbase Exchange and utilises multiple layers of security. After purchasing my coins on Coinbase Pro I moved them for free onto Coinbase and from there onto my wallet for just a few pennies of ‘miners fees’ (I’m still to research the concept of Bitcoin mining and the relevance of the network to the currency at which point I’ll understand what this means!)
Following less than an hour of cumulative effort (including watching the tutorials on YouTube) and less than £1 expenditure on fees, I’d achieved my intended goal and converted my £100 into Bitcoin which are now securely stored safely in my online wallet.
On the day I invested, Bitcoin closed at a price reflecting a 3% return on my investment. They’ve since increased further in value.
I’m not so deluded as to think that the price won’t drop once again — as an investment vehicle Bitcoin is clearly extremely volatile which is why so many are drawn to the potential for life-changing gains and why many more have no-doubt lost more than they could afford while chasing such riches.
In 2017 it reached a value of nearly $20,000 before plummeting to a little over $3,000. Much of this volatility may be a side effect of its maturation as a recognised and accepted store of value, or there may be worse to come.
Either way, it’s my intention to continue to drip-feed a little money into my Bitcoin investment regularly over time, to build up my share of the Bitcoin pie.
It would be nice to think that in time and with education and experience I might be able to predict fluctuations so that I’m not always buying at the top price. My goal remains to buy and hold Bitcoin (and potentially other of the bigger coins such as Ethereum) for the long-term.
Fear of missing out was what finally pushed me to figure out how to make my first cryptocurrency investment — a fear that in 20-years’ time one Bitcoin will be worth $100,000 and I’ll be lamenting that I didn’t take the plunge and make at least a small investment when it was beneath $30,000.
Five years ago I might have also had the excuse that the cost and technical-mechanics of investing in Bitcoin were prohibitive for a small-time investor like me. Now it seems like those barriers have definitely lifted.
There are undoubtedly many other ways of making an investment other than via Coinbase too — I mention it only to demonstrate that with a little time and a bit of experimentation, anything is possible!
Sometimes the best way to overcome FOMO, or indeed any fear is to take action and to see what’s possible.
Note: This article is for informational purposes only. It should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.
TA: Bitcoin Price Back Below 100 SMA, Why BTC Could Retest $45K
Bitcoin price failed to stay above $50,000 and $49,000 against the US Dollar. BTC is now below the 100 hourly SMA and it is likely to continue lower towards $45,000
- Bitcoin started a fresh decline below the $50,000 and $49,000 support levels.
- The price is now trading well below $50,000 and the 100 hourly simple moving average.
- There is a connecting bearish trend line forming with resistance near $49,000 on the hourly chart of the BTC/USD pair (data feed from Kraken).
- The pair could extend its decline towards $45,000 as long as it is below $50,000.
Bitcoin Price Turns Red
After forming a short-term top near the $52,600 level, bitcoin started a fresh decline. BTC traded below the $51,200 and $50,000 support levels to move back into a negative zone.
There was also a break below a major bullish trend line with support near $49,500 on the hourly chart of the BTC/USD pair. The pair even broke the $48,000 support level. There was a clear break below the 50% Fib retracement level of the upward wave from the $43,050 swing low to $52,650 high.
It is now trading well below $50,000 and the 100 hourly simple moving average. It seems like the bulls are trying to protect the 61.8% Fib retracement level of the upward wave from the $43,050 swing low to $52,650 high.
Source: BTCUSD on TradingView.com
If they fail and the price trades below $46,500, there are chances of more losses. The next key support is near the $45,000 level, below which the bears might aim a test of the $43,000 support zone.
Fresh Increase in BTC?
If bitcoin stays above $46,500, it could correct higher. An initial resistance on the upside is near the $48,000 level. The first major resistance is near the $49,000 level and the 100 hourly simple moving average.
There is also a connecting bearish trend line forming with resistance near $49,000 on the same chart. To move into a positive zone, the price must clear the trend line resistance and then gain pace above the $50,000 barrier.
Hourly MACD – The MACD is now gaining momentum in the bearish zone.
Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now well below the 50 level.
Major Support Levels – $46,500, followed by $45,000.
Major Resistance Levels – $48,000, $49,000 and $50,000.
Analyst tells Tesla to dump Bitcoin for buybacks as shares plunge alongside MSTR’s
A former equities CIO of Goldman Sachs drew an strong response on Twitter after suggesting Tesla should sell its Bitcoin and buy back company shares.
The price of TSLA shares have fallen 28% from $863.42 to $621.44, since news broke on Feb. 8 that Tesla had made a $1.5 billion BTC acquisition.
MicroStrategy’s shares have fared even worse in the short term. The company, which is headed by Bitcoin bull Michael Saylor and just completed its latest acquisition of $15 million in BTC on Mar. 3, is now down 50% from its all-time high of $1,315 from Feb. 9.
Tesla’s share market woes are likely due to a number of factors. In early February, it was reported that Tesla had been reprimanded by the Chinese government over quality control issues after receiving consumer complaints. The broader stock market has also experienced volatility, with the S&P 500 down 4.1% in the last 30 days.
But the tweet from longtime Tesla analyst Gary Black, who has several decades of financial management experience, sparked a debate on whether Tesla’s purchase of $1.5 billion in Bitcoin last month had benefited investors.
— Documenting Bitcoin (@DocumentingBTC) March 4, 2021
“I don’t want them buying back stock,” said Twitter user Techgnostik. “I want them investing in growth, and making another billion on their BTC position.”
Black countered by suggesting TSLA would also draw inclusion by more fund managers with a share buyback program, considering it of greater value to the investor than buying BTC “with excess cash.”
.@Tesla‘s mission is to “accelerate the world’s transition to sustainable energy.” It is not about catering to the mercurial whims of short-term traders in $TSLA.https://t.co/93hr25iJ27 https://t.co/eJReXuvPo4
— AMuchBetterFace (@AMuchBetterFace) March 4, 2021
It’s not easy to ascertain the impact buying Bitcoin has had on a company’s bottom line. While MicroStrategy’s share price has halved in a month, shares of MSTR are still up 340%, (from $146.63 to $645.66), since the company announced its first purchase of 21,454 BTC on Aug. 11, 2020. The price of BTC is currently up 310% from the same date.
Experts divided on BTC predictions: Bullish or super bullish?
Despite the current battle between Bitcoin bulls and bears around the $50,000 price mark — and an 8.7% pullback over the past 24 hours — a raft of analysts and commentators have got out their crystal balls to tip a glittering future for Bitcoin prices.
On Mar. 4, Senior Commodity Strategist for Bloomberg Intelligence Mike McGlone pointed to historical data to suggest that Bitcoin is on the way to $100,000.
McGlone’s logic revolves around the growing discount for shares in the Grayscale Bitcoin Trust which is at the same level as last year’s Black Thursday collapse. The discount refers to when shares in the Grayscale Bitcoin Trust trade for less than the value of the underlying Bitcoin (normally they trade at a premium).
Looking at historical data, said that
Grayscale #Bitcoin Trust Discount May Signal March to $100,000 – Bitcoin’s end of February price disparities on U.S. regulated exchanges portend a firming price foundation, if history is a guide, and are evidence of just how nascent the crypto is. pic.twitter.com/qj6hfTvH8K
— Mike McGlone (@mikemcglone11) March 4, 2021
Twitter user “Lee Hendricks” wasn’t convinced, suggesting the catalyst for Grayscale’s discount could be the result of pressure from upcoming ETFs and other crypto funds. (Although that’s arguably bullish too.)
The Bloomberg strategist isn’t the only expert with high expectations for BTC, with influencer and YouTuber Lark Davis stating on Mar. 4 that “we are just now past the first major price wave,” with two more, larger waves to come.
— Lark Davis (@TheCryptoLark) March 4, 2021
On March 2, technical analyst Kaleo posted a chart predicting BTC will hit $100,000 near the start of April this year.
It’s a follow-up on his “Bitcoin Halving Reward Era Price” analysis chart two years ago predicting the price would reach $200,000 around mid-2021. He tweeted two weeks ago that he still has faith in it:
“It is by far the most accurate, long-term chart prediction I’ve ever seen for Bitcoin… $BTC will hit $200K+ this cycle.”
Another analyst who goes by the Twitter name MasterChangz, told his 10,000 followers he believes Bitcoin will hit the $200,000 mark even earlier than mid-2021, potentially at the start of April. The next rise, he said, is to $77,000 over the next two weeks.
Ok this bull run fractal is become more insanely accurate by the day.
I’m literally making bank of trading it, its like a cheat sheet.
— (@MasterChangz) March 4, 2021
Other predictions are even bolder with Kraken CEO Jesse Powell stating the cryptocurrency could reach $1 million or even “infinity” in a Bloomberg television interview on Mar. 4, adding that it will eventually become the world’s currency.
“We can only speculate, but when you measure it in terms of dollars, you have to think it’s going to infinity,” he said. “The true believers will tell you that it’s going all the way to the moon, to Mars and eventually, will be the world’s currency.”
Kraken Head of Growth Dan Held, echoed this prediction on Mar. 5, claiming on Twitter that:
“Bitcoin is more likely to hit $1,000,000 than $0.”
Even past Bitcoin skeptics are becoming crypto converts with investment firm Sanders Morris Harris CEO George Ball admitting to Yahoo Finance on Mar. 4 that he believes cryptocurrencies are now “attractive” as a “small part” of any portfolio.
“With the cryptocurrencies, I think there is a fundamental hydra-headed shift that makes them attractive as a part, a small part, of almost any portfolio,” Ball said.
Despite this wave of optimism, history also suggests March could be a bloody month, with Bitcoin’s price falling across the month in six of the past nine years by an average of 5.8%. The most recent of these occurred last year on Black Thursday when the price plunged by 50%. That said, the second-biggest monthly candle in BTC history happened in March 2013, when the price shot up 179%.
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