FINTECH | CYRPTOCURRENCY
Ethereum (ETH) has been growing exponentially in the last few years. And now, you have an opportunity to invest in this popular cryptocurrency with DCA at highly discounted prices
Why an Investment in ETH with DCA Is the Right Move — Right Now
Imagine if you had bought ETH at its initial coin offering (ICO) for 31 cents or $.31. Your $100 investment would now be worth $351,500, and if you think you “missed the boat,” you haven’t been paying attention.
As remarked in their article, Bitcoin Bear Markets: We’ve Been Here Before, “From peak to trough, we’ve seen a 75% drop from $69,000 to around $17,600. We’ve seen a ‘crypto contagion’ of sorts, with the blow-up of the Luna/UST ponzi, the liquidation of Three Arrows Capital (3AC), and other ‘crypto’ market participants undergoing stress, such as Celsius stopping withdrawals and other entities having exposure to 3AC (e.g., Voyager, BlockFi).”
Please, “don’t shoot the messenger.” I would not call the LUNA/UST disaster a “Ponzi,” more of a mistake in calculating the power of “crypto burning.”
However, some crypto exchanges and financial service companies need to ask themselves the wisdom of loaning hundreds of millions of dollars of their clients’ money to 3AC.
Many of these CEOs were blinded by the hype and gave in to the greed. Hopefully, the 3AC default will help educate these financial managers and they’ll make better decisions for their clients going forward.
Unfortunately, some won’t have that option, Voyager Digital might be forced to sell for pennies on the dollar if they can’t right the ship after lending 3AC $670 million.
“Burning is a term used in cryptocurrency to describe taking a certain amount of tokens out of circulation to increase the value of the existing tokens already in circulation.” — Outlook India.
What Is ETH?
The ETH cryptocurrency was created to make payments between people without going through banks or other third parties. The Ethereum White Paper was released by Vitalik Buterin in 2013.
He is a Canadian-born Russian programmer and writer. He was one of Ethereum’s co-founders and co-founder of Bitcoin Magazine but has since moved on to other crypto projects. He tweeted on 20 May ’22, “I’m not a billionaire anymore.” Though I, for one, believe that is only temporary.
Actually, ETH or Ether is the native or working currency for the Ethereum Virtual Machine (EVM). It rewards workers who verify ledgers and is used to pay fees for coins and transactions on the ETH platform.
It is a “fork” from the original ETH chain after a DAO smart contract allowed a 3.5 coin theft in 2016.
Stakeholders approved a reversal of the theft, which created a hard fork and permitted Ethereum Classic to continue.
Most ERC tokens use the Ethereum ecosystem for smart contracts and decentralized applications (DApps).
Crypto, especially ETH, currently the #2 crypto according to Coin Market Cap, could be suitable buy-and-hold investments because it can provide a return on investment (ROI) over long periods due to its high volatility compared to traditional assets.
Crypto bull markets (usually started by the BTC halving schedule) last far longer than bear markets. The next BTC “halving” is scheduled in 2024, so if you consider that, we will likely have two years or more of “crypto winter.”
“…crypto winter is when prices contract and remain low for an extended period. Analysts believe the wheels of the emerging crypto winter were set in motion earlier in 2022.” — Forbes.
Many Altcoins Might Not Make It Through This Crypto Winter
There are around 18,465 cryptocurrencies. It’s hard to believe, but we’re now in the middle of a bear market. Many projects struggle to gain traction and make money, making it difficult to survive the current downturn.
Decentralized finance (DeFi) are applications running on the blockchain that don’t require any centralized power or oversight. There are other ways that DeFi and blockchain can be used in the world of finance.
Proof of Work (POW) requires miners to solve complex mathematical complications to prove transactions. In contrast, Proof of Stake (POS) requires users to deposit money into the system and have it staked by others in exchange for a percentage of block rewards.
“Staking cryptocurrencies is a process that involves committing your crypto assets to support a blockchain network and confirm transactions. It’s available with cryptocurrencies that use the proof-of-stake model to process payments. This is a more energy-efficient alternative to the original proof-of-work model.” — The Motley Fool.
But many intelligent investors are discounting the notion of energy efficiency for cryptocurrency. Think about it. How much more energy do the banks and other financial institutions use compared to peer-to-peer (P2P) decentralized transactions on the blockchain?
“Gas fees” are paid by those who want to send transactions through smart contracts and make payments in cryptocurrency — they don’t affect anyone else unless they have enough gas left over from their transactions.
“A gas fee is the amount of Ether (ETH) required for an Ethereum blockchain network user to conduct a transaction on the network. Gas fees are used to compensate Ethereum miners for their work in verifying transactions and securing the network.” — US News Money.
How Would Your Investment Portfolio Look If ETH Reaches 10,000 USD Within Five Years?
No one can know where ETH will go with cryptocurrency’s volatility in the coming years. However, continue to invest a consistent $100 per month contribution, and the crypto market returns to a bull market. It could only take 3 to 5 years before you have made your original investment back and more.
If you could buy one coin each year, or three to five coins total, your $3,600 to $6,000 investment would be worth between $30,000 and $50,000. That’s an excellent ROI.
Everyone seems to think you need to invest a lot of money in crypto, but many millionaires have been created that started with small amounts.
When its price is higher, you will buy fewer, but when the price is lower, you will get more coins. That’s the beauty of DCA during a bear market.
If you could buy one coin each year, or three to five coins total, your $3,600 to $6,000 investment would be worth between $30,000 and $50,000. That’s an excellent ROI.
Could ETH Boost Your Retirement Savings Through Regular Contributions?
ETH and other alternative cryptocurrency coins (altcoins) have become a popular way to invest your retirement savings.
With DCA, you deposit money into a retirement account each month. That money is then allocated over time and invested in various ways, such as crypto, stocks, precious metals, bonds, and other investment vehicles — depending on how much you invest and what your financial advisor suggests (if you use one).
Ethereum Going Mainstream As Fidelity Investment Is Getting Aboard the Ethereum Ship
#ethereum #bitcoin #cryptonews
I am not a financial advisor, so don’t take what I say as such. I only provide generic information and consolidate information from various sources to inform and entertain.
The idea is that the longer you leave your money in a blockchain account, the more you get back on average when you withdraw it at retirement. One method is a cryptocurrency Individual Retirement Account (IRA).
“How to Reduce Your Taxes with IRA Contributions. Each year, you can contribute to an IRA a total of $6,000, or $7,000 if you’re 50 or older. Contributions to a traditional IRA are generally deducted from your taxable income immediately.” — Forbes.
Many complain about how much tax they pay and how little Social Security pays. But they rarely use an IRA to offset their tax liability and increase the money they’ll have for retirement. Instead, they depend on Social Security alone.
Did you know that 25 percent of Americans have no retirement savings, an IRA, or a pension outside Social Security?
Many cryptocurrency IRAs even offer a reward of $100 or $150 for your initial deposit. However, many have high initial deposit requirements, maintenance fees, and/or require you to use their digital or cryptocurrency specialist.
You must do your own research (DYOR) to invest with the best company that matches your goals and investment needs.
The recent article from Investopedia, Best Bitcoin IRA Companies, is a good place to start. Their article points out the pros and cons of several Bitcoin IRAs.
However, some IRAs accept altcoins, such as ETH, ADA, SOL, and others. For instance, they rate Regal Assets as the “Best Variety of Cryptocurrency Supported.”
Plus, initiating an IRA separate from your employer-supported IRA will help you diversify your retirement savings and holdings.
There are limitations and restrictions, so it is advisable to consult a financial planner or income tax advisor.
A Look at ETH Statistically
These statistics were taken directly from Coin Market Cap, so if you disagree with them, feel free to check another source.
ETH Data Current as of 1 JUL ‘22
“The live Ethereum price today is $1,094.91 USD with a 24-hour trading volume of $18,471,511,087 USD. We update our ETH to USD price in real-time. Ethereum is up 0.07% in the last 24 hours. The current CoinMarketCap ranking is #2, with a live market cap of $132,879,264,710 USD. It has a circulating supply of 121,361,182 ETH coins and the max. supply is not available.” — Coin Market Cap.
ETH to USD Conversion Chart All-Time
Final Thoughts on Buying & Investing ETH with DCA
“We simply intend to be fearful when others are greedy and to be greedy only when others are fearful.” — Warren Buffett.
Going ALL IN CRYPTO
Most crypto and indeed stock market investors are hurting right now. But, those buying right now will likely be the new millionaires in the next bull run.
Will ETH go down even further? It very well could. However, unless you have a crystal ball, DCA is the best method to get the best average price.
Using DCA to invest a specific amount of money into your chosen market has been around for decades and remains one of the surest methods to get the best price, as there is no guaranteed way to guess the bottom of any market.
However, suppose you use DCA to buy ETH during this crypto winter. In that case, you could be pleasantly surprised by your crypto portfolio’s value during the next bull run.
Plus, using an IRA could create a nest egg for retirement while realizing some excellent tax exemptions and savings.
The DCA concept and benefits are as old as investing itself — though the actual phrase “…was first coined by Benjamin Graham in his book The Intelligent Investor.”
The book has a 4.7 out of 5-star rating on Amazon with 36,284 reviewers.
“By far the best book on investing ever written.” — Warren Buffett.
Benjamin Graham: How To Beat The Market Every Year (6 Investing Ideas)
Created and uploaded to YouTube by Cooper Academy.
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Make sure to do your own research (DYOR), never invest money you can’t afford to lose, and check your investment vehicle frequently. The cryptocurrency market is volatile, and price changes take place minute-to-minute.
In fact, the BTC price soared $10,500 in one day in October 2019.
DISCLAIMER: This article is for entertainment and informational purposes only. It should not be considered financial or legal advice. Not all information will be accurate. I am not a financial adviser, and you should consider anything I write as informational and friendly banter to show you what is possible if you invest your money in these vehicles. However, there are no guarantees. Consult a financial professional before making any significant financial decisions.
Note: This post contains affiliate links. Read my disclosure statement for additional information.
Stephen Dalton is a retired US Army First Sergeant with a degree in journalism from the University of Maryland and a Certified US English Chicago Manual of Style Editor. Also, a Top Writer in Nutrition, Investing, Travel, Fiction, Transportation, VR, NFL, Design, Creativity, and Short Story.
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