By Andrew Shilling, MarketWatch featuring David Koch, CFP®, AIF®, CFA, Senior Wealth Advisor
If you are looking to take advantage while prices are low, here are 5 of the most-recommended crypto exchanges to get started.
Crypto was hot, until it was not. At the time of writing this article, Bitcoin and Ethereum were posting year-over-year losses of more than 50%. That may sound pretty terrifying, but large price swings are nothing new for those who’ve been in the game for a while. Anyone who watched since its birth in 2009 remembers Bitcoin’s blistering climb from zero to $1,237.55 in Dec. 2013. Just three days after that peak, its price had already plunged roughly 44% to $687. And those who hadn’t pulled out were again awarded a couple of short years later after its steady surge to more than $19,345 by the end of 2017.
Following the crypto industry’s most recent bout of volatility, Americans’ overall attitudes towards the digital currency has sharply declined. Since 2021, their overall comfort levels have fallen by as much as 12%, a Bankrate survey found.
The only thing surprising about that number, according to Bankrate analyst James Royal, is that it’s remained as high as it has. “Traders are betting on something that is not backed by the assets or cash flow of an underlying company, in most cases,” Royal says. “Many Americans have woken up to find that their crypto is worth no more than pet rocks. It’s not surprising at all that Americans are losing faith in a confidence game.”
Not everyone is as alarmed by the declines. Omid Malekan, adjunct professor at Columbia Business School and author of the upcoming book “Re-Architecting Trust: The Curse of History and the Crypto Cure for Money, Markets, and Platforms,” says for those originally attracted to crypto because of its core value proposition, that core value is still there. “If you believe in the technology, its decentralization … that is globally accessible, then none of that has changed,” Malekan says.
For those with a higher risk tolerance, there is still potential for big gains over the long haul, he says. Consider Bitcoin’s latest peak of more than $68,000-per-coin in 2021. Although it was a bumpy ride — and has since dropped significantly to below $20,000 — Malekan says a willingness to stick with your convictions can come with big rewards in the crypto game, reminding that “the internet took over a decade to be realized.” But he adds: “I do think that for ones new to the highly volatile asset class, if you’re going to get involved, you should be careful how you do so.”
How much is the right amount to invest?
Well, you don’t need to invest at all, and it’s important to understand that you can lose it all, and that there is “intense” volatility, as Royal puts it. But if you want to go into crypto, Halbert Hargrove senior wealth advisor and certified financial planner David Koch say anyone looking should avoid putting in more than they’re comfortable losing. “Don’t put next month’s rent check into the hot new digital token,” Koch said.
Since the crypto industry is also relatively young, Koch adds that it’s imperative to “do your research” and “use due diligence when working with an exchange or a custodian like Coinbase or Gemini,” pointing out that some exchanges in the past were previously hacked and forced into bankruptcy.