Like many Americans, you probably saw at least a few Super Bowl advertisements for the cryptocurrency industry last weekend. And if you’ve been paying attention to the news, there’s no question you’ve heard of someone creating a cryptocurrency wallet. With all the excitement, you may even be tempted to invest in, or mine, cryptocurrency yourself.
But before you dive in, you should know that cryptocurrency is inherently risky.
Unlike banks and brokerages, there's no regulatory body watching over the crypto market, which reports to the state and federal government. In addition, crypto prices are heavily susceptible to sentiment. As sentiment changes, prices shift — sometimes drastically. In other words, cryptocurrency is driven mainly by the hope that someone will purchase it for more in the future than the initial investment.
It’s natural to be excited about a new opportunity, especially one with as much media buzz as cryptocurrency continues to generate. But before you get started, it's crucial to research and understand the risks.
Some folks would like to have some exposure to cryptocurrencies but they might not want actually own them outright on a crypto exchange like Coinbase or in a crypto wallet.
Fortunately, there are other investment vehicles, such as Exchange Traded Funds, or ETFs, that investors can own in which the price of the ETF will fluctuate with the price of cryptocurrencies like Bitcoin, for example. These types of investments give people the opportunity to have exposure to cryptocurrency through more traditional investment vehicles without actually having to own own any cryptocurrency outright.
If you are interested to see if your portfolio could include exposure to cryptocurrency, don't hesitate to give me a call or send me an email.