There has been a lot of frenzy around the surge in the prices of cryptocurrency. While some are rejoicing in the gains, some others are moving their money from safer investment to the crypto market without good knowledge in investing or familiarity with the crypto space. FOMO (Fear Of Missing Out) is setting in, and people are jumping in with no concrete plans to drive their investment decisions.
I have learned my fair share-the hard way- during the last crypto bull run in 2017. And I can tell you for free, it is better and easier to learn from other people’s experiences than to learn from yours.
With all that’s going on with the hype, I thought I should let you in on some open secrets on the crypto market and investment in general. These are all-around investment checklists and especially useful for beginner investors. Perhaps it might save you a few dollars and some sleepless nights.
As simple as this investment advice may sound, it is as hard to follow as it can get. Greed motivates us. When we see an opportunity to make some cool money, we jump in. Most times, we go all in even though we may not know how to handle the tides. In an earlier article, I talked about how I lost all of my savings in the FOREX market. Like I said in that article, I was well aware of this basic advice too. But I failed to put on my life jacket before diving into the sea, and I paid for it.
Investing what you are willing to lose simply means if you lose all of your investment today, you will still be able to take care of your basic needs. You don’t want to get depressed because the crypto market plummeted just after you invested.
Keep it at the back of your mind (perhaps in front) that crypto assets fall under high-risk investments. Therefore, your investment is at high risk; From a crash in price to the safety of your wallets.
while everyone is talking about the sharp rise in the prices of bitcoin and other cryptocurrencies, we might also want to remember that bitcoin, before now, has dropped almost 50% in a single day. And it can do the same anytime. The point here is the crypto market is very volatile. There are usually heavy swings in prices so, don’t be fooled when the prices are going up because it can dive in a blink of an eye.
YouTubers who have disappeared since the last bull market are resurrecting. And as usual, there are out giving ridiculous advice on investing in the cryptocurrency market. Remember, they, like myself, are just content creators and will say just any BS just to put out content. So, you shouldn’t take all we say seriously. When the crypto market was in the red, they had nothing to say, but suddenly they are experts in a bull market.
It still follows the earlier advice on not listening to charlatans who claim to be experts. Just yesterday, I saw a random YouTube thumbnail on my YouTube feed. Apparently, the YouTuber is predicting the price of bitcoin for $100,000 and litecoin for $1,000 in 2021. I didn’t bother to watch the video because I am sure it isn’t worth my time. Whenever cryptocurrencies are in a bull market, we see predictions flying here and there online. People try to feel smart, or stupid, if I may. They make random calls and when, by happenstance, they hit, they scream “I said it” at the top of their lungs.
Moreso, no matter how fast and consistently bitcoin rises, you do hot know when it will crash. In the book fooled by randomness, the author tells a story of a chicken that has been well-fed for years by its owner and didn’t know it was only being fed well because the owner wants it to get big so as to be eaten. Past events do not guarantee further events. Do not be fooled by randomness.
Yes. And It is not just dangerous for your financial goals. It is also dangerous for your mental health. When I was day trading, I had sleepless nights, anxiety, and poor concentration — to say the least. This is not just my story, it is the same for thousands of people who gamble daily, in the name of day-trading, and hope to win.
Only 1% of day traders are profitable. The rest find who to scam to make money. Ignore all WhatsApp or telegram groups claiming to give accurate signals. They are fraudsters.
If you are new to investing, you don’t have to rush just because a market or company share is on the rise. There is always and would always be opportunities to invest in any market. Avoid FOMO. Take your time to learn and fully understand what you are investing in to avoid unnecessary losses. The crypto space is like the wild west. If you take nothing from this article, remember not to play with more than you are willing to lose.
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XRP Lawsuit: On Ex-SEC Chair Jay Clayton’s Sudden U-Turn After Suing Ripple
Ripple’s Boss, Brad Garlinghouse, on Monday, left a few remarks via his Twitter handle on a Wall Street Journal’s post co-written by former US-SEC, chairperson, Jay Clayton.
The post which was co-written by Brent MacIntosh, the former Undersecretary of the US Treasuries for International Affairs, sought to preach the all-to-familiar stance of most crypto companies: ‘Crypto needs regulation, but it doesn’t need new rules.’
Garlinghouse spelled out surprise over Clayton’s turncoat comments that the US government has no concrete and adequate regulatory framework for the crypto industry. He further added:
“Cryptos, like nearly any new innovative technology, can be used for good or bad purposes. The problem is that US companies seeking to be compliant and use this tech for good are left in limbo (or for Ripple, worse!) because of a lack of a clear, predictable framework.”
Jay Clayton, in his last days at the SEC, pulled a shocking stunt on the crypto community, suing Ripple for what it believes is the undocumented sales of large-scale XRP digital assets to unidentified customers.
The bane of the case which was first announced in December last year is in determining if XRP – the digital currency of Ripple – is an investment contract or just another type of asset existing in digital forms. Assets bought and sold do not lie under the jurisdiction of the SEC, but investment contracts (also known as securities) are well within their powers to investigate, using the Howley test as a yardstick.
When compared to Bitcoin and ETH…
XRP, unlike fully decentralized Bitcoin, takes the shape of a centralized digital currency. This is because Bitcoin is still being mined by different people across the world, but Ripple pre-mined billions of XRP coins.
How The Case is turning out
The latest in the seven-month-old lawsuit is a winning streak for Ripple. Judge Sarah Netburn denied the SEC’s plea to examine all records of Ripple’s conversation with lawyers and expert advisers to determine if it knew what class of asset XRP is, and what violations of the SEC’s laws it may have knowingly violated. This signified a sigh of relief for the company which has called the lawsuit a hindrance to its growth and plans to go public.
Clayton further expressed that the foundational frameworks of the US laws suffice to build upon for crypto regulations, but the government has to be careful not to commit under-regulation or over-regulation.
Ethereum Co-Founder Anthony Di Iorio Bets Big on the Future of Cardano and Polkadot
Anthony Di Iorio, a Canadian entrepreneur and the co-founder of leading smart contract platform Ethereum, said that he believes in the potential of Cardano (ADA) and Polkadot (DOT).
In an interview with crypto proponent Anthony Pompliano, Di Iorio, who is also the CEO and founder of Canadian blockchain startup Decentral and crypto wallet Jaxx, revealed that he has a diversified investment portfolio featuring several top projects, including Cardano and Polkadot.
A Big Fan of Cardano and Polkadot
“Now I’ve kind of fallen back to just simplicity. I’m in a number of different projects, but the majority of my stuff is in the top projects. I’m a big fan of Polkadot, I’m a big fan of Cardano.”
Di Iorio went on to narrate why he was so sure of the future of these two projects. He had joined the Ethereum development team earlier in 2012 when he met Vitalik Buterin at a Bitcoin conference.
He has formed strong relationships with other co-founders of Ethereum, including Vitalik Buterin, Cardano’s founder Charles Hoskinson, and Polkadot’s current CEO Gavin Wood.
Di Iorio admitted that while he worked with these men, he knew that they were goal-oriented and would help push these projects further.
“Big fan of Charles, let’s say that. You know, taking some different approaches in the way that they’re doing things, much more on the academic side of what he’s done and bringing stuff forward. Real big fan of Gavin Wood… Knowing those guys from the days back at Ethereum – and knowing their drive and knowing their competitiveness and their smarts – I was able to see those projects for the last few years and know that they were gonna get to where they’ve gotten up to.”
Not Getting Lost in DeFi
Despite all the recent hype about DeFi, Di lorio pointed out that he is keeping his investments simple and investing in larger projects.
“Most of my stuff is in the top few things, Ether, Bitcoin, Cardano, Polkadot. I like Cosmos as well. And there’s a few others, but I’m not getting lost in all the DeFi stuff. I just think there’s not enough time, not enough energy. It’s a full-time gig to be running a lot of that stuff and keeping on top of stuff, so I’ve simplified my life quite a bit over the past few years.”
Featured image courtesy of Business Insider
What you should know if your bank is exposed to Bitcoin
On one hand, El Salvador recently became the first nation to officially declare Bitcoin as its legal tender, and on the other, several nations have recently opined that their indigenous banks face a ‘threat’ from the world’s largest crypto-asset. Nevertheless, the rise in the adoption of cryptocurrencies has been accompanied by regulators taking the fast-growing market seriously.
Banks will now face “the toughest” capital requirements for their holdings in Bitcoin and other crypto-assets under global regulators’ plans to brush off the insecurity offered by the “volatile” crypto-market.
Using money laundering, reputational challenges, and massive price swings as the base of their proposal, the Basel Committee on Banking and Supervision is in the news after it explicitly stated that the banking industry faced “increased risks” and “financial stability concerns” from crypto-assets.
Accordingly, they have now placed Bitcoin in the “highest risk” category. The aforementioned committee comprises a host of nations and global institutions as its members.
The Basel Committee isn’t alone, however, with a Bank of International Settlements exec recently commenting that El Salvador’s Bitcoin policy is an “interesting experiment.”
*BITCOIN PUT IN HIGHEST RISK CATEGORY IN BANK CAPITAL PROPOSAL
— *Walter Bloomberg (@DeItaone) June 10, 2021
What’s more, the panel proposed a 1250% risk weight be applied to a bank’s exposure to Bitcoin and certain other cryptocurrencies. Bloomberg’s estimates highlighted,
“In practice that means a bank may need to hold a dollar in capital for each dollar worth of Bitcoin, based on an 8% minimum capital requirement.”
However, stablecoins and other tokens tied to real-world assets are set for lower capital requirements. The report further highlighted,
“The capital will be sufficient to absorb a full write-off of the crypto asset exposures without exposing depositors and other senior creditors of the banks to a loss.”
The proposal did not specify any specific timeline, and hence, the implementation of these rules can take a couple of years. The proposal is, however, open to public comment before it comes into effect. It should also be noted that the committee said that the initial policies were “likely to change” several times as the market “evolves.”
Even though banks like HSBC have been cautious about stepping into crypto-trading, a few big names, like Standard Chartered Plc have announced their entry into the space.
As for Bitcoin, it fell by over 3.7% in the last 24 hours to trade at $35,418 at press time.
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