5 Things to Know About Bitcoin Investing

By Melissa Finnegan0 Comments

As more people develop an interest in cryptocurrency, specifically Bitcoin, what do should investors know about investing in the blockchain space?

Why is cryptocurrency investing seeing an increase in growth? In the latest Roger Report video, cryptocurrency investor Roger Bryan provides five things to know about Bitcoin investing.

What to Know About Bitcoin Investing

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Hello, welcome to the Roger Report for September 2019. Before we dive into the news, I want to talk about the five things you need to know about investing in Bitcoin. It's really important to have a strategy and an understanding before you jump into this. Let's go over some of these rules in order to help you make the right decision about whether or not Bitcoin is right for your portfolio.

The future right now is very bright for Bitcoin. As we come out of the first 10 years since Bitcoin was created, and we come into mass adoption in the financial markets and the general public, there's a couple different reasons for this. The first is, there are now futures contracts being settled in Bitcoin. They're just slowly getting started, and this is something that happened this month, creating the potential for a lot of demand for Bitcoin.

The same could be said about ETFs. Now, ETFs are having a little bit rougher time getting to market, because the US government is still holding back, based on their concern about market manipulation and pricing in foreign exchanges, which they have no control over. ETFs eventually will come to market again, creating demand for the hard asset.

There's also now currency adoption, as more and more organizations or institutions are accepting Bitcoin as payment, getting an actual use case for the asset. The last on why the future is bright for Bitcoin are STOs. More platforms are coming to market with security tokens, meaning equity-based shares in companies that are digital currency. As those exchanges start to mature and you see more offerings come to market, you're going to also see that Bitcoin gets added into those exchanges, and you'll see the interchangeability between Bitcoins and securities, the same way the US dollar is. Again, adding to a bright future for Bitcoin.

When is the right time to buy Bitcoin? This is interesting, because the majority of people are going to try to buy Bitcoin when it goes parabolic and it's in the news. A smart investor is going to look at historical trends and they're going to find entry points into the market, that allow them to be positioned for the next parabolic rise, while limiting the risk on the downside.

In the past few years, we've seen three times where Bitcoin's price has mimicked what it's doing right now. The summer of 2003, most of 2015, and the summer and fall of 2016. Really, what happens there is we have this sideway movement as the market waits for something to happen, to tell it which direction to move.

If you look at the first rule here about why the future is bright for Bitcoin, and then you look at the historical trends for Bitcoin, you see that we're following in a range where we've been around that $10,000 mark for quite a few months now. As these new things happen, ETFs, futures, STOs, adoption of currency, the only place it can go is up from there.

Number three. Governments are getting into digital currency. China recently published that they are going to take the Yuan completely digital over the next few years. They're doing this so then more transactions at the institutional level, especially in the oil markets, can be settled in the Yuan easier than the USD, which has been a staple for the world's dominant currency for generations now.

The next thing to know is security. This is one of the biggest concerns that people have, but it's also one of the things that has been solved in the last few years. When you look to buy Bitcoin, look to go through a custodian that can store these assets for you effectively and securely, allowing you access to them when you need, but also letting you sleep at night instead of doing a hard wallet on your phone, worrying about if somebody hacks into your phone or steals your phone. Work with somebody that has a great custodial relationship, where all of that security is taken off of your plate and passed along to those entities.

The last thing that you need to know about buying Bitcoin is, because of its parabolic nature, there is a real reason to look into making these investments inside of an IRA. I highly recommend talking to the team at Equity Trust about their digital asset IRA, so that you can keep those profits in your family and for your legacy, instead of giving a majority chunk back to the government, who's definitely cracking down on profits from cryptocurrency. It's not something that you can hide as of the last three years. Not that you could ever, or was it ever recommended that you do, but you can definitely take advantage of some of these tax-free or tax break opportunities by talking to Equity Trust about their digital asset IRA.

Now, each month, I do like to review some of the major news that's in the market, and we talked about a couple of those as we went through the five things that you need to know about investing in Bitcoin. Some of the other ones that are coming up, Coinbase announced that institutions are depositing between 200 and $400 million into cryptocurrency every week based on the activity they see on their platform.

This is where the institutions know what's coming with ETFs and futures. They're able to invest in the underlying asset that will allow them to bring products to market, that feed the need of the general market. You as an investor, if you're in Bitcoin now, you're still very, very early, even at the $10,000 level, because this is such a significantly limited supply item that they're never going to make any more of, and the float has actually diminished as more investors have bought into Bitcoin, and then locked it up for the long-term.

There is still a lot of push. We always talk about what's going on in the United States because that's where we are, but there's a lot of international push throughout Europe, throughout China, throughout, in Singapore, in some of the other Asian countries, you've got to take a look at the global markets. When you think of the fact that there's only 21 million of these that will ever exist, there's 17 or 18 million of them in circulation, the float is actually below 10 million, because so many people have locked these up, or if you look at some of the wallets where there hasn't been a transaction in the last five years, whether those are lost keys or they're just people that are not looking to do anything with the asset, that supply continues to come down.

As these governments create regulation that's more friendly towards the asset, they create their own digital currencies, which will be interchangeable with it, as security tokens come onto market that'll be interchangeable with it, all of these things push up demand on a finite supply item, creating more opportunity.

I mentioned that future contracts are now being settled in bitcoin. Bakkt has been working on this for about two years, and they started accepting deposits from institutions in the last few weeks. It's been a slow-go, and most of the institutions that are putting their assets into Bakkt in order to be able to play on the futures contracts, have been buying those over the last few years in anticipation of this. It hasn't created necessarily new market demand.

There's also a big underlying tide for large buys, not being on the public markets and they're being exchanged privately, is assets stockpiles are being built in Bitcoin in order to move them into these new financial instruments, that's giving investors a lot of hope for a bright future for Bitcoin.