Blockchain
I Sold a Large Part of My Portfolio To Buy More Cryptocurrencies
The 3 reasons I am so bullish
I never thought it would happen so fast.
In November 2020, I bought Bitcoin for the first time. Then the rally started.
Recently, I sold a large portion of my ETF portfolio. I used the money to buy more cryptos. You might not believe me, but I call myself a rational investor and thought about this decision extensively.
Here are the three reasons why I made this step.
1. Fear of Regulations Is Exaggerated
It is virtually impossible to ban a cryptocurrency. I know you’ve heard this argument before.
It’s not the only one I have up my sleeve, but one after the other.
Cryptocurrencies are just a network of computers communicating with each other. When we talk about banning, we usually mean banning exchanges.
Exchanges are a centralized entity where people can exchange fiat money for cryptocurrencies—this not the only way to get cryptos. Peer-to-peer transactions and decentralized exchanges are on the rise and much less vulnerable to regulation.
China heavily regulated cryptocurrencies. But despite that, Bitcoin mining is still a colossal business¹. If even China can’t completely take over, what government can?
But one after the other. First of all, regulations would have to be initiated. However, I think this is unlikely to happen. Let me explain.
I’m not here to spread conspiracy theories. But I firmly believe that politicians are not the only ones who have a say in regulating cryptocurrencies. Bitcoin’s correlation to other assets decreased over the last year² — making it more and more a digital Gold. Investors are always interested in having assets that do not rise or fall together.
In addition, Bitcoin is much more transparent, more exchangeable, and probably even more environmentally friendly than gold.
The big banks want a piece of the pie now. Morgan Stanley is the first to make it happen³.
It is precisely these instance situations that have an impact not only economically. Economics always influences politics — it’s called lobbying.
Lobbies don’t always have to be bad. It doesn’t always have to be corruption. It can also be self-interest consulting without the flow of money and gifts.
Blockchain and cryptocurrencies are already established in the economy. Politicians will meet too much resistance when trying to establish strong regulations.
That is the reason why I am very optimistic about regulations.
2. Blockchain Has Evolved Into More Than Just Payment Systems
Most critics of cryptocurrencies only talk about Bitcoin. The funny thing is, they don’t notice it — it is because they lack broad knowledge.
- They talk about cryptos not being suitable for payment.
- They talk about the fact that the coins have no intrinsic value.
- They say that cryptocurrencies are only a payment system for criminals.
What they are not talking about is so much more.
- They are not talking about NFTs that could make documents secure against counterfeiting.
- They are not talking about smart contracts that could store ownership securely.
- They are not talking about decentralized storage of content to make it more retrievable and protect it from censorship.
That’s just a fraction of the possibilities that blockchain projects offer.
A few years ago, it was all about bitcoin and digital payments. Nobody thought about the full potential of blockchain. In the meantime, the benefits have reached the real economy. Heaps of companies are already using blockchain⁴.
But it’s not just businesses: Even the government of Ethiopia is now cooperating with the blockchain project Cardano to improve the education system⁵.
3. You Are Not Too Late for the Party
I remember well the Bitcoin-run 2017/2018.
At the peak, the mood of some people was lousy. “I wish I had invested earlier — now it’s too late.”
Three years later, we know better. Something tells me that we will regret not having invested in 3 years. But it’s not just my gut feeling that tells me this.
We are at the beginning of enormous development. Yes, the market capitalizations of cryptocurrencies are at dizzying heights. But the numbers are deceiving. Compared to other currencies, Bitcoin still has a lot of room to grow. Currently, BTC is the 14th largest currency and is already more extensive than the Russian ruble⁵.
Just ask people around here if they invested in cryptocurrencies. I have a single friend who also owns some — no one else in my circle.
Compared to other assets, many people find it more challenging to acquire cryptos. ETFs on cryptocurrencies could be a gamechanger and allow many more people to invest.
If blockchain technology continues to catch on, everyone who currently invests will be a true pioneer.
Sources
[2]: https://www.coindesk.com/research/reports/coindesk-quarterly-review-2021-q1
[4]: https://101blockchains.com/companies-using-blockchain-technology/
