Many people feel overwhelmed by the perceived complexity of cryptocurrencies and are afraid to invest in what is clearly a volatile asset class.
But the truth is, it’s extremely easy to get your feet wet trading cryptocurrencies. With major US exchanges like Coinbase, buying Bitcoin or Ether is in many ways easier than traditional stocks.
Simply go to Coinbase.com and set up an account there like you would for any online brokerage, and you’ll be buying and selling crypto in no time. Coinbase also acts as a wallet, so you can store the coins you buy there.
There are other exchanges and wallets to use as well, I explore them in an educational video series called Crypto-U that is part of my premium publication, Crypto Cycle. Learn more about that here, including a preview of the educational series, which covers:
Plus how-to videos on how to use different exchanges and wallets.
The crypto market is growing by leaps and bounds and reached an all-time high of over $3 trillion in November 2021.
That’s the combined market cap of all coins.
After a large drawdown in 2022, it began trending up again and was at $1.3 trillion in 2023.
Bitcoin alone makes up nearly 40% of that. And Etherum makes up another 20%. So those two combined make up nearly 60% of the crypto market’s entire market cap.
Crypto market capitalization (or market cap) is determined by adding up the total of all the coins that have been mined and then multiplying the number of coins in circulation by the current market price of a single coin.
Bitcoin is programmed to only allow 21 million coins to ever be mined. At the start of 2023, there will be nearly 19.25 million mined. Multiplying that by its current price of around $28,000 gives Bitcoin a market cap of nearly $550 billion. Note, though, that the market cap is constantly fluctuating with the amount of coins mined and the current price.
Generally speaking, the larger a coin’s market cap, the more stable of an asset it tends to be.
This is why Bitcoin, which has the largest market cap by far, sees less dramatic selloffs when compared to smaller market-cap altcoins which often plunge 99% in value during bear markets or negative headlines.
This volatility works to the upside as well, which is why investors love to speculate on altcoins hoping to find the next 100x gem.
Cryptocurrencies fall under 3 market cap categories:
Large-cap – includes Bitcoin and Ethereum. Large-cap coins typically have a market cap of over $10 billion. This includes Bitcoin (BTC), Ethereum (ETH), as well as larger stablecoins like USD Coin (USDC) and Tether (USDT). These are considered lower-risk investments due to their high liquidity and established track record of performance.
Mid-cap – includes coins with market caps between $1 billion and $10 billion. These are higher risk but have higher potential reward. Examples include Avalanche (AVAX), Shiba Inu (SHIB), and many others.
Small-cap – includes projects with less than $1 billion and are by far the most volatile. You can see huge gains in these small-cap tokens but can also lose it all. There are thousands of them with more created every day.
Cryptocurrency is a very cyclical asset class.
And this is mostly due to what’s called the halving (sometimes called the halvening). This refers to the process built into Bitcoin that cuts the mining rewards in half every time 210,000 blocks are mined.
This event occurs roughly every four years and coincides with huge rallies in the price of Bitcoin. The rest of the cryptocurrency market follows behind with the many thousands of altcoins often seeing much higher gains as speculation runs rampant.
Bitcoin’s first halving occurred in 2012 when the asset traded for a price of $12. A year later, Bitcoin had soared to over $1,000 before correcting and trading sideways for a couple of years.
Then in 2016, Bitcoin witnessed its second halving. By late 2017, it had peaked at just under $20,000. And similarly, in 2020, Bitcoin halved again, and we witnessed the asset surge up to $69,000 in 2021.
The next halving is slated to occur in April of 2024. It’s interesting to note that the price of Bitcoin tends to bottom 15 months ahead of the next halving event. This would mark November/December 2022 as the bottom of the current bear market with Bitcoin sitting just under $17k. If we follow the historical cycles, Bitcoin should begin surging in 2024 in anticipation of the next halving topping out sometime in 2025.
Much of this will depend on the macroeconomic environment. Bitcoin and other cryptocurrencies have only existed in an environment of QE and low interest rates – essentially a 12-year bull market in stocks. With the Fed aggressively raising interest rates, we’ve witnessed a lot of pain in the markets.
We also have to contend with a potential recession. As such, Bitcoin might not be as enthusiastic as it was in previous cycles. Still, the trend is our friend, and there’s no doubt that we’re going to see some major positive price movement in the sector moving forward.
Given the fact that we are likely very near the bottom of this current crypto bear market, investing in safe large-cap cryptos like Bitcoin and Ethereum is a common-sense strategy. I explain them in more detail below as well as a couple of altcoins that I personally like.
Bitcoin is the oldest cryptocurrency on the market today — and the largest by market capitalization, with a value of more than $600 billion at time of writing.
It was created in 2009 by Satoshi Nakamoto, a pseudonymous computer scientist (or group of computer scientists) who objected to the financial sector bailouts many governments undertook in response to the 2008 financial crisis.
Nakamoto wrote in the original Bitcoin whitepaper that: “the root problem with conventional currencies is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
Bitcoin is ostensibly resistant to this kind of “debasement” because its total supply is capped in perpetuity at 21 million bitcoins.
Ethereum is a much younger cryptocurrency, having been launched by programmer Vitalik Buterin in 2015. It’s the second-biggest after Bitcoin by market cap, with a value of more than $158 billion at the time of this writing.
The Ethereum blockchain is considerably more flexible than that of Bitcoin. Like the Bitcoin blockchain, it keeps track of a digital token, which is called Ether (ETH).
Programmers can write automated transactions called “smart contracts” into the Ethereum blockchain, allowing people to develop secure decentralized borrowing and lending systems without the need for intermediaries like brokerages and banks.
The blockchain can also be used to create and manage other types of tokens, such as the non-fungible tokens (NFTs) that are gaining traction as a title-deed management system for valuable collectibles and works of art.
Ethereum recently underwent a major upgrade to its blockchain transitioning from proof-of-work (PoW) to proof-of-stake (PoS). This change cuts Ethereum’s energy usage by 99%. Traditional PoW blockchains like Bitcoin require massive amounts of electricity to complete transactions.
Another major feature of the upgrade was the “London Hard-Fork.” Unlike Bitcoin, Ethereum has no fixed maximum supply. But with this update a certain amount of all mined Ether will be “burned,” which permanently destroys a portion of the digital currency.
ETH issuance is projected to decline by 90% and the supply of Ether reduced by 5% annually. As demand for ETH increases and supply decreases, this deflationary pressure should cause a long-term rise in the price of existing Ether tokens.
And considering that 90% of decentralized finance (DeFi) is built on Ethereum, the long-term price outlook for the token looks strong.
Like Bitcoin, Ether has experienced some wild price fluctuations over the course of its short life. But its price has stayed at a more reasonable level — currently hovering around $1,100, compared to Bitcoin’s $17,000.
Started as a joke back in 2013, Dogecoin is a cryptocurrency based on the popular “Doge” meme. Friends and software engineers Billy Markus and Jackson Palmer spent an afternoon copying a bunch of Litecoin code to create their own coin. This was done to poke fun at the speculative mania that surrounded the crypto market during its first major bull run.
It was mainly used as a fun internet currency that people would send each other for free and for much of its life it was worth just a fraction of a cent. But during the height of the 2017 bull market it exceeded $0.01 for the first time.
It has long been a favorite of Elon Musk, who has supported the project for years. He was largely responsible for triggering its massive rise in 2021 to $0.74 with various tweets and media appearances.
It all goes to show how much money can be made off speculation in the crypto markets.
Dogecoin still has a fierce and passionate community as well as the world’s richest man behind it. As such, I don’t think it will die any time soon. And with Elon Musk now running Twitter (X), Doge will likely be incorporated into their digital payments system in the future. Tesla already accepts Dogecoin for merchandise and select charging stations. I wouldn’t be shocked to one day be able to purchase a whole car with it in the future.
Some companies that currently accept Dogecoin payments include:
Binance Coin BNB
With over 500 million users worldwide, Binance is the largest cryptocurrency exchange in terms of daily trading volume. It was founded in 2017, but was forced to move out of China and relocate to the Cayman Islands after the Chinese government cracked down on the crypto industry.
The Binance Smart Chain is a fast and inexpensive layer-1 protocol. And it has seen massive growth in the last couple of years due to Ethereum’s slow speeds and high fees. It has been used as a cheap and fast alternative.
PancakeSwap may sound like a joke but it’s growing in users every day. With $100 million-plus in 24-hour trading volume, it has become the most popular decentralized exchange (DEX) on the Binance Smart Chain. It allows you to exchange Binance Coin (BNB) for thousands of other tokens without the need for a centralized service.
This platform has grown massively since its September 2020 launch. It now has many users and supports many assets. It’s also a popular platform for purchasing many of the small market-cap meme coins that have exploded in popularity.
As mentioned before, BNB coin is used to pay transaction and trading fees on the Binance Smart Chain. Because of this utility, its price has been relatively stable compared to other cryptocurrencies that have been dumping over the last year. I think there is tremendous growth potential for this coin in the future.
I have a premium research service that comes with a complete educational series called Crypto-U.
And I also run a real money portfolio that allows you to follow my trades in real-time.
I have learned via hands-on trading and investing over the years, becoming a self-taught expert. And I was able to make over 90 times my money in the last crypto cycle.
With all of the negative headlines surrounding cryptocurrencies of late — including Sam Bankman-Fried’s FTX disaster — many are asking the question of whether or not investing in crypto is a good idea.
I’ve always followed the famous investing maxim “buy when there is blood in the streets.” Blood is flowing through the crypto streets as I write this. As such, I think there are a lot of opportunities in the space.
Why do I feel that way and why should you invest in crypto?
The truth is that crypto is the best-performing asset class in human history.
Just look at Bitcoin.
Created in 2009 as a decentralized alternative to a failing fiat monetary system, it was initially only adopted by a few cyberpunks, libertarians, and computer geeks. One could easily mine it with a basic computer for free and it was traded among miners and other crypto enthusiasts for mere pennies.
By 2021 it had surged to an all-time high of $69,000. From the bottom that’s a gain in the millions of percent!
Much of Bitcoin’s price momentum is triggered by speculation but there are underlying factors that explain its long-term success. The most important of which is Bitcoin’s decentralized nature and fixed supply. These two properties make Bitcoin the soundest money on the planet.
Fiat currencies, on the other hand, are backed by nothing but government decree. And as we’ve seen time and time again, they inevitably fail. As a country’s economy worsens, governments print more and more money in a desperate attempt to prop things up. Rampant inflation follows to the detriment of the citizenry.
Bitcoin is not under the control of a corrupt government or central bank. The network is maintained by thousands of computers that verify the massive online ledger known as the blockchain. No one can print trillions of Bitcoins out of thin air either. Its code determines that only 21 million coins can ever be mined into existence.
Computer code and cryptography have replaced a corrupt financial system maintained by those who wish only to enrich and empower themselves at the expense of the common people.
With everything Bitcoin has going for it, there are four main external factors that influence its price:
Even though Bitcoin is the original, thousands of alternative cryptocurrencies called “altcoins” have sprung up in recent years. And many of these projects have witnessed incredible gains.
One notable example is Shiba Inu. Created in 2020, it was a self-proclaimed ‘meme coin’ that sought to supplant Dogecoin as the top dog coin in the crypto space. It was capped at 1 quadrillion coins, which means that early investors could buy billions of them for relatively little money. This made everyone feel like a Shiba Inu whale.
In fact, Shiba Inu could be purchased for just $0.00000000051 per token on its first day. In just a little over one year the token surged all the way to $0.00002571. That’s a gain of more than 5 million percent! It made at least one investor a billionaire.
Small market-cap altcoins are the most powerful vehicles for speculation ever created. Are they risky? Heck yes. But they can also make you rich practically overnight.
But not all altcoins are lottery tickets in a new wrapper. With the advent of layer-1 protocols like Ethereum, programmers are able to build applications on top of blockchains. These have revolutionary potential for many aspects of society.
Just a few key innovations are:
The price of Ethereum has been no slouch either! When it was initially launched in 2015, Ethereum was valued under $1.00. By 2018 it had surged all the way to $1,396! Crypto is extremely volatile and cyclical so as the 2018 bear market arrived in earnest, Ethereum plunged down to as low as $80.
As the crypto bull market commenced in 2021, NFTs (non-fungible tokens) took the spotlight with popular sets like CryptoPunks and Bored Ape Yacht Club trading for tens of millions of dollars. ETH, the native token of the Ethereum blockchain, was required to buy and sell these NFTs. Also, thousands of altcoins like Shiba Inu were launched on Ethereum.
All of this activity spurred the price of Ethereum to a new all-time high of $4,800 in November, 2021. Remember, ETH was trading at under $1.00 just five years prior. Not every altcoin is going to have the price performance of Ethereum, but there are still a lot of opportunities out there.
Some other reasons why you might consider investing in cryptocurrencies:
It is important to carefully consider whether investing in cryptocurrencies is a good idea for you. Cryptocurrencies carry significant risks and are highly volatile, and it is important to thoroughly research and carefully assess the potential risks and rewards before making any investment decisions.
I do the legwork for you in my premium publication Crypto Cycle, where I manage a real money portfolio. I also steered my readers clear of the Terra Luna stablecoin collapse as well as the various crypto lending company failures such as Celsius, Blockfi, and others.
Most importantly, I kept my readers away from the FTX exchange which turned out to be a giant scam where customer deposits were used for leveraged trading and personal expenditures by employees.
Here are a few tips to help you avoid pitfalls when investing in cryptocurrencies:
It is important to keep in mind that there is no such thing as a "safe" investment, and all investments carry some level of risk. This is especially true for cryptocurrencies, which are largely speculative and are often manipulated by whales (holders of a large number of tokens).
Cryptocurrency scams can take many forms and can be difficult to spot. Here are a few tips to help you avoid falling victim to a cryptocurrency scam:
That said, it’s not unusual to realize gains of 10x, 50x, or even 100x during crypto bull markets if one is invested in the right projects early on.
I personally had multiple +60x gains in 2021. I’m keeping a close eye out for crypto projects that will deliver similar returns over the next few years, and have created a $50,000 real money portfolio so you can mirror my trades as I make them.
Join Crypto Cycle today and start your journey to crypto wealth via ongoing education, exclusive insights, and real-time trades.
— Daily Profit Cycle Research