Missed out on Bitcoin? It might not be too late on these ones…

Bitcoin is old news.

The massive gains that early adopters enjoyed might be behind us now.

I still think that as a 10-year investment, you would be stupid not to hold some.

But the 10,000%-plus per annum rises are a thing of the past. Holders might have to get used to more sedate 100%-plus per annum returns.

But what if you want the thrill of the really big wins?

The opportunity to turn $1,000 into $100,000 or even $1 million?

I’m sure you have read the recent stories about how $100 invested in Bitcoin in 2010 would now be worth $75 million (probably more in the time it took me to write this sentence, given the current action).

‘If only’…you think.

Well, the good news is that there are still some fantastic opportunities out there if you want to take a punt on ‘the next Bitcoin’.

So what are the best cryptocurrencies?

I won’t delve into the features of each asset at this time. In the coming weeks and months, we will present more ideas on the best ways to invest in this exciting industry.

But for now, consider what’s happened just over the past week

Ether has again reached incredible new highs, now trading over US$180 from just US$10 last August.

Many early backers and start-ups have made some great returns.

As an example, Swarm City, a new ride-sharing community, raised 77,600 ether in a crowdsale last November. At the time, that was worth less than $1 million. Fast-forward to today, that 77,600 ether is now worth $14 million.

Zcash more than doubled in value overnight — from US$120 to U$271 in 24 hours. The market cap of this coin is US$306 million. Compare that to Bitcoin at US$37 billion.

But this price action isn’t some pump-and-dump scheme commonly seen in this industry three years ago.

This rise was due to breaking news that JPMorgan — yes, JPMorgan, the $303 billion financial giant — is going to integrate Zcash into its platform.

Incidentally, this is a bit of a turnaround for JPMorgan. In 2014, CEO Jamie Dimon famously predicted Bitcoin’s downfall!

Clearly the technology has come a long way from the scams and novelties of the first wave of alternate ‘cryptocoins’ a few years ago. Legitimate and big-name companies are now actively involved.

(I say this as the proud owner of Dogecoin, a novelty cryptocoin with a dog as its logo. That was the only reason I bought it three years ago…)

Incidentally, Dogecoin just quadrupled in value over the past month, after falling 50% over the previous few years. Even some of these novelty coins can have unique technological features that make them valuable in certain niches.

Litecoin, the silver to Bitcoin’s gold, is up from US$5 in March to US$39 today. And of course, Bitcoin is flying.

Peach Aviation, a discount Japanese carrier, just announced it would accept payment in bitcoin. The Japanese government is legislating virtual currencies in a bid to make them more acceptable to mainstream businesses.

You need to start looking seriously at these cryptocurrency opportunities.

My view is that cryptocurrencies are just now ‘crossing the chasm’ from early adopters to early majority. In my humble view, it’s just the start. If you can’t bear the thought of buying ether now at $190, will you finally break down and buy it when it goes to $400? How about $4,000?

As with all investments, when everyone feels comfortable buying, you can be sure the big gains are gone. Don’t wait for that time.

I still believe…

  1. There’s more upside than downside to cryptocurrencies. Much more.
  2. Volatility will continue to be significant — don’t be surprised by moves as much as 50%; hang on for the long term.
  3. Don’t invest more than 10% of your investable assets. Adjust this down to a level that allows you to sleep at night. My view is that the younger you are, the bigger punt you should take, as some of these may be 10-year-plus investments. But the gains could be outstanding.
  4. Buy a mix; don’t overcommit. Some will be scams or just ill-thought-out. Some good ideas will fail due to competition. Remember VHS versus Betamax in the 80s? Many thought Betamax would win as the quality was better, but the cheapness of the VHS machines proved decisive. The best tech doesn’t always win…

It’s not often that a completely new asset class comes along. These could be once-in-a-lifetime investing opportunities.

Regards,

Ryan Dinse

Money Morning 

 


Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:


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