Should YOU invest in cryptocurrencies?
Do NOT invest in crypto unless you can say YES to these 6 questions
Everybody wants to invest in crypto. Including my house help's 14-year old son. True story.
I am always asked HOW to invest in crypto. But I think the most important question people should ask me is, "Should I invest in crypto?".
Crypto is a new, small, highly immature, and extremely volatile market.
Don't invest in crypto because you think it's "cool". A fixed deposit with a boring bank might not sound cool but may be a better investment for many people.
Let's start with 6 questions that you must answer honestly:
- Can you afford to lose your entire crypto investment?
- Are you tech-savvy and ready to learn how to keep your crypto safe?
- Are you ready to spend a good amount of time every single day researching cryptos and monitoring your portfolio?
- Can you wrap your head around the fact that crypto prices depend more on tweets by (evil?) billionaires like Elon Musk and less on logic and economics?
- Are you ready to understand the meaning of stuff like this? - "Sharpe Ratio is the average return earned in excess of the risk-free rate per unit of volatility. Volatility measures the price fluctuations of a cryptocurrency and is usually calculated using variance and standard deviation."
- Are you ready to spend time looking at graphs like this?
If you can honestly answer "yes" to all these questions, then let's talk about some recent crypto disasters:
A cryptocurrency called Internet Computer (ICP) started off in the top 10 cryptos of the world. And then crashed more than 90% in a month - from a price of $737.20 to $20.08.
A cryptocurrency called TITAN went from $52.46 to $0.00000003 in 10 days! One of its most famous investors was the non-evil billionaire Mark Cuban. Yes, even super-smart billionaires make bad crypto mistakes.
A cryptocurrency called SafeDollar suddenly went to 0. And this was a stablecoin - its price was supposed to be "stable"!
Still sure that you want to invest in crypto? Great, continue on...