Is It Too Late To Invest In Cryptocurrency?
Since the first digital blockchain currency was mined way back in 2009, Bitcoin millionaires have come, gone and come again. Since then, new coins have flooded the market, with some — like Bitcoin itself — rallying 1,000%, 2,000% or even more.
In the midst of all of these incredible gains, the natural question is whether or not it’s too late to invest in cryptocurrency. The truth is that no one can guarantee whether crypto will rise or fall from here, as it’s an entirely new market that is neither well-defined nor well-regulated. But there are clear arguments on both sides of the coin as to whether it’s time to buy or not.
It’s Too Late: Governments Are Cracking Down
One of the fears of entering the crypto market has always been that governments around the world will shut down acceptance and even production of the coins. That time may already be here. In late May 2021, China began cracking down hard on bitcoin mining and trading, which sent crypto prices cascading downwards. According to Boris Schlossberg, managing director at BK Asset Management, the primary reason for this crackdown was because “Chinese authorities are keen to see their own digital currency in the form of the yuan become the primary unit of account in the Chinese economy.”
More recently, countries as far-flung as Estonia, Iran and Singapore have launched crackdowns of their own. If other governments follow suit, demand and support for Bitcoin and other cryptocurrencies could crash.
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It’s Not Too Late: Crypto Is Way Down From Its Recent Highs
If you’re a believer that the crypto market is another version of the stock market, there might be no better time to buy cryptos like Bitcoin because they are currently on sale. As of Nov. 12, Bitcoin was back down under $63,000 — closer to $62,000, actually — and other cryptos had fallen by a similar amount or even more. While Bitcoin is still up a ways from its September lows of around $40,000, it’s down a full 10% from its all-time high, which it set just a few days before its most recent fall.
As the history of Bitcoin has shown, big drops like this are not at all unusual, and yet the cryptocurrency has managed to consistently climb to new highs. If you were curious about Bitcoin a few weeks ago, the current sell-off might be a chance to dip your toes into the market.
It’s Too Late: Crypto Is Going To Zero
Skeptics believe that cryptocurrency is an asset class with no store of value, no barrier to entry and no value as an exchange currency. As such, skeptics view crypto as simply a speculative asset class with no long-term viability as a true asset class. At a CNBC-hosted panel in Davos, Switzerland in 2019, Jeff Schumacher, founder of BCG Digital Ventures, had this to say about Bitcoin: “I do believe it will go to zero. I think it’s a great technology but I don’t believe it’s a currency. It’s not based on anything.” In 2020, famed investor Dennis Gartman offered the same assessment to Bloomberg, saying that if central banks “refuse to give up their monopoly on monetary policy,” Bitcoin could one day plunge to zero.
Hedge fund tycoon John Paulson — famous for making $20 billion by predicting the downfall of the housing market in 2008 — is also betting against crypto. He told Bloomberg on Aug. 30 of this year that “cryptocurrencies, regardless of where they’re trading today, will eventually prove to be worthless. Once the exuberance wears off, or liquidity dries up, they will go to zero. I wouldn’t recommend anyone invest in cryptocurrencies.”
It’s Not Too Late: Crypto Is Going To $500,000-plus
Rather than seeing Bitcoin go to zero, believers like Ark Investment’s Cathie Wood suggest quite the opposite. The popular investment strategist and CEO believes that Bitcoin will actually hit $500,000. Part of the reason for Wood’s bullishness is her belief that asset managers will eventually allocate up to 5% of their portfolios to cryptocurrency. Greg Cipolaro and Dr. Ross Stevens, researchers at New York Digital Investment Group, support this belief, adding that “Increasing fundamental demand combined with a fixed supply and automatically declining supply growth make a compelling case for Bitcoin as an alternative investment for institutional investors.” The researchers are referring to the fact that the supply of Bitcoin is limited to 21 million coins.
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