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Cryptocurrencies: Can They Really Make You A Millionaire?

It’s one of the news you hear more and more often, people who have invested small amounts in cryptocurrencies and millionaires sprang up in a few moments.

And in the turbulent times we have been going through since the beginning of 2020, with the coronavirus hitting the traditional markets mercilessly, there have been many who have re-evaluated their investment priorities and strategies.

At a time when confidence in the global economy was severely undermined, investment circles turned en masse to the cryptocurrency market in late 2020, when an exponential rise was recorded in the prices of some of them.

At a time when financial institutions were trying to assess and limit the generalized damage caused by the pandemic, amid growing fears of instability, the cryptocurrency market was a big winner.

The profits were crazy. Despite widespread uncertainty at the beginning of the year, cryptocurrencies became a $ 760 billion market at the end of 2020, approaching the all-time high of 2017 ($ 800 billion).

What was the value of the same market at the beginning of the year? Just over $ 185 billion! The amazing course of Bitcoin and other tokens (such as Ethereum, Litecoin, Dogecoin etc.) in 2020 and 2021 created unprecedented interest in cryptocurrencies.

But can they really make you a millionaire?

Why invest in cryptocurrencies

For the huge returns. Their prices have reached new highs lately and many investors are seizing the opportunity.

Investing in cryptocurrencies has the potential to become profitable and sometimes extremely profitable. If you had invested, for example, $ 1,000 in Bitcoin a decade ago, you would have over $ 15 million today.

The easy (quick, debatable) enrichment provided by cryptocurrencies does not mean, however, that those who deal with them make money. So how likely is it that you will get rich from the crypto market?

The answer is not simple. In the past, investing in cryptocurrencies had a black reputation for being very risky. And the rumor was largely justified.

Even the news about it, if you just read it, you would have smelled that prices tended to go up and down almost uncontrollably. And not just month after month, but week after week and sometimes even day after day.

The ups and downs still exist, but from 2020 the market looks a bit more regulated. Institutional investors have now entered the cryptocurrency game, but well-established electronic payment platforms have accepted them.

Crypto is no longer a dark way of trading. The recent development is a breakthrough that all analysts have welcomed, as the more they support it and the stronger it is, the more stable it will become as a market.

In January 2021, for example, the Goldman Sachs publicly expressed its support for cryptocurrencies, welcoming the entry into their market of “large investments by hedge funds, investors and companies”.

Even its billionaire president JP Morgan Chase, Jamie Dimon, changed his attitude towards them. He once called them “scams”, but now he declares himself “faithful” to cryptocurrencies, but also to the technology that generates them (blockchain).

How to get rich from cryptocurrencies

If we have to say it, it is not as easy as it has been made by internet millionaires. And the truth is that one can easily get carried away by their stories.

Erik Finman became a millionaire by investing $ 1,000 in Bitcoin when he was 12 years old. But Glauber Contessoto also invested all his savings at Dogecoin by February 5 and by mid-April had reached its first million dollars.

And he was not alone. Dogecoin made many people rich and very fast, recording even a 400% increase in its price within a week. A walk on Reddit and Twitter left no room for doubt as to how many got rich from the gallop of the cryptocurrency.

But if you regret that you did not put what you had and did not have in the cryptocurrencies, time to see the other side. Choosing the right cryptocurrency and at the right time to invest is infinitely more difficult than the success stories in internet.

Today there are thousands of cryptocurrencies. You may have heard that Bitcoin, whose market at some point even reached 1 trillion. dollars, represents about half the funds invested in cryptocurrencies.

You may also know Ethereum and Litecoin, which have become more mainstream nowadays and you can buy and sell them impressively easily.

According to CoinMarketCap, there are currently over 9,000 in circulation cryptocurrencies. Even more are being cut every day and we will find out at some point in the future.

You would have to be very lucky, or have fortune-telling skills, to have chosen Dogecoin from Feathercoin, for example, some years ago. And Feathercoin was even made for more serious situations than the “joke” Dogecoin.

Today, of course, the purchase of Feathercoin is valued at 12 million dollars and Dogecoin at 50 billion.

Certainly, if you put a group of people tossing coins in the air, some of them will be crowned 10 times in a row, says cryptocurrency expert Chris Kuiper, vice president of CFRA Research.

In the same way, if you get them to buy and sell cryptocurrencies all day, some of them will do very well. And it’s probably the time when everything happens.

You need to predict when a cryptocurrency will take over. Something that ranges from very difficult to practically impossible. Especially since it is still a market that is heavily influenced by events that the investor cannot influence, by information on Reddit or because Tesla says something about Bitcoin.

“Suddenly you face this very dangerous fear of being left out as an investor,” explains Megan Horneman, CEO of Verdence Capital Advisors.

It is, he tells us, like when the internet started. Everyone started buying like crazy what had an internet address, until the market collapsed majestically. Only with cryptocurrencies the thing is even more dangerous, as here you do not buy companies with profits or losses, but you buy someone’s idea. And you buy it without a substantial way of estimating its value.

The history of Dogecoin is very typical of our discussion. The cryptocurrency that started as a joke, as a meme, has managed to gain a very strong community over the years. And it was the same community that built it the game with the share of GameStop.

Only Richard Smith, an economist and CEO of the Foundation for the Study of Cycles, says: “I do not think this was something you could have predicted or that we could be optimistic about it going on.”

And of course cryptocurrencies not only go up, they go down as well. If you had bought, say, $ 1,000 in Bitcoin in mid-2017, before its price skyrocketed, you would have made $ 8,000 in a few months. But if you had bought them when its price had reached the ceiling later in 2017, then you would have lost more than $ 800. Almost all of your investment…

Not at all easy

But even if you bought the right cryptocurrency at the right price and expect to get rich, with the conditions being more than favorable, again this may well not happen. And one of the reasons is the cryptocurrency itself, it can stop circulating.

Even Bitcoin, considered the most respected out there, may at some point be banned. Or to regulate its market so much that it is no longer an investment product.

The US Secretary of the Treasury, Janet Glenn, said in early 2021 that the US government is considering shutting down Bitcoin, as it believes it is mainly used for “illegal financing”.

“Investments like these only work on expectations, every front page for market regulation removes air from their sails,” adds Horneman.

Risk and profit

As we said, it is easy to get caught in the nets of cryptocurrencies, the gains are sometimes monumental. Bitcoin rose 372% last year. Its main competitor, Ethereum, rose by 1,500% over the same period. And Dogecoin made a crazy flight to the ethers (over 19,000%).

Based on these numbers, it is difficult not to become a millionaire with cryptocurrencies! Only the profits of the past do not guarantee corresponding returns in the future. Cryptos remain one investment very high risk, as you have nowhere to rely.

That is, it is not like shares. Where they climb, they can be just as easily submerged. If one looks at the course of Bitcoin, this is very typical. Even in seasons that rise steadily, it can fall by 26% in a month. Many have cried their money.

And the reason for these constant ups and downs is the simple fact that it is an extremely volatile investment, on the verge of speculation.

Some of them claim that as a long-term investment they can pay off, it is enough that you never need the money you invested. Despite its ups and downs, Bitcoin is also growing by 30% year by year. Almost steady.

Leaving aside the crowns of easy riches, everyone advises calmness and prudence with cryptocurrencies. And of course not to be your only investment. You only invest in crypto if you have a secure investment plan that allows for cryptocurrencies.

Experts advise that the right way is to dedicate up to 5% of your investment portfolio in cryptocurrencies. And more generally in high risk placements.

If you do not expect to become a millionaire overnight, and if the money you have invested in cryptocurrencies is money that you can lose, then the magic can happen στιγμή

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