The key to making money in cryptocurrency is simple.
Buy. Hold.
That’s it.
Yes, you need good security too. But the most important thing is simply being able to hold on during volatile years.
Many are tempted to take profits after they’re up 2X or even 5X. Both would be a mistake (unless you desperately needed the cash).
Let me explain why…
Cryptocurrencies are a (potential) monetary revolution. Bitcoin could become a common investment asset and value transfer vehicle.
As I often point out, ownership today is tiny, with far less than 1% of the population owning any cryptocurrency (aka crypto) at all.
But adoption is accelerating incredibly fast. Let’s look at some metrics.
Coinbase, the largest U.S. cryptocurrency exchange, is adding around 55,000 new accounts per day.
In a month, that’s 1.7 million new crypto (mostly bitcoin) users.
Let’s say half of those actually invest, and that they invest $3,000 on average (less than half a bitcoin). I suspect this may be a conservative average, but it’s hard to say.
This influx of new buyers from Coinbase would add more than $2.5 billion in buying pressure per month (if they each bought less than half a bitcoin).
The total value of all 16.6 million bitcoins in the world today is around $130 billion, with each coin being worth around $7,838 as I write this.
On the supply side, 1,800 bitcoins are currently being “mined” per day. Not all of those are sold, but let’s pretend they are for this example. That’s $13.4 million in selling pressure from new coins per day. In a month, that’s $402 million worth of new bitcoins mined.
So from just one exchange, we have perhaps $2.5 billion in new buying pressure. And selling pressure from new coins is just around $402 million.
Let’s also factor in the following:
