Ever since the China’s clampdown on ICOs and shutting of various China’s crpyto-exchanges, many people have voiced concerns on whether the crpyto-bubble is going to burst soon.
This article also chipped in on the gloomy situation: http://www.marketwatch.com/story/bitcoin-ether-and-other-cryptocurrencies-may-be-seeing-the-beginning-of-the-end-2017-09-06?fref=gc&dti=1758792264412132
So the question here is:
Is it Safe to Invest in Cryptocurrencies?
Actually i shared my answer on the Seedly’s Facebook Group but i will do a longer post here.
So… a little background on myself, I invested in stocks for 10 years and started riding on this crypto-trend this year. So i know a bit about both..
Concern: No Fundamentals, dividends of sort
In my honest & humble opinion, Crypto has no intrinsic value of sort and survive practically on hype, news and probably technical analysis.
It can go up 100% today because U.S. agrees to big on the Crypto-ETF or drop 100% when every country stops this thing for good.
In the event the company issuing the tokens go bankrupt or didn’t manage to achieve what its ‘whitepaper’ set out to do, you will suffer huge losses too.
Investing in Tokens is akin to Buying Stake in a Start-Up
On the other hand, its cannot be looked upon as something w/o fundamental analysis. If not, there will not be so many Venture Capitalists supporting them in the first place.
The way i see it, buying the tokens is like buying into the future of a startup like e.g. Shopback, Carousell, TradeHero or even Seedly (http://thesmartlocal.com/read/singapore-startup). You won’t know whether the biz ideas will fizzle or grow to disrupt the status quo in time to come.
And there will not be any P/E ratio or earnings growth to look at because many of them are growing bigger despite making losses (Grab). All you can believe is that the startup has tremendous growth potential and will make it big one day.
Imagine 1 coin growing to become like Grab one day (dominant market share). Fun fact: Just 5 years in the making and Grab is now valued at a whooping US$6 BILLION according to reuters’ sources after the latest funding from Didi Chuxing, SoftBank and others.
To sum up, investing in Crypto is akin to provide financing to risky kickstarter projects. You hope that one day, it can attain huge market share based on its product/service. In return, you get rewarded with the tokens (‘shares’) which would have skyrocketed in value.
A Word of Caution
Just don’t ever whack your house mortgage on this thing (https://cointelegraph.com/news/man-borrows-325000-to-buy-bitcoin-investment-or-gambling-on-life-savings).
For me, i will only look for solid projects which have long term growth potential and keep the crypto investments to a minimum (10% of my portfolio).
In short, limit your risks and let your winners run. 😀 💹
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