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How to start investing in cryptocurrencies: strategist
Ric Edelman, founder of the Digital Assets Council of Financial Professionals, joins Wealth! to explain how novice investors should enter the cryptocurrency market.
He points to bitcoin ETFs as a great place to start: “They’re just like any other ETF, which everyone knows about. Buy them in a regular brokerage account. They’re incredibly cheap.” Warns that Bitcoin (BTC-USD) is still very volatile, so investors should “stay focused on the long term, not overinvest, and not invest for the wrong reasons.”
Edelman explains that more cryptocurrency ETFs will come to market, as ethereum (ETH-USD) currently has several applications pending. “I’m not sure how quickly you’ll see something else after that, but [bitcoin and ethereum] it will open doors in the long term. In five years there will be dozens, maybe even hundreds, of cryptocurrency ETFs,” he adds.
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This post was written by Melanie Riehl
Video transcription
Well, if you are curious about entering the cryptocurrency market but are still wary of the volatility and security concerns of owning digital assets.
Our next guest suggests that spot Bitcoin ETF S might be the right path for you.
Joining me to explain are Rick Edelman, founder of the Digital Assets Council of Financial Professionals and author of the best-selling book The Truth About Cryptocurrencies.
Welcome to Rick.
It’s nice to see you in person.
You are too good to be around today.
Absolutely.
So let’s break it down a little deeper here.
Some of the pros and cons of investing in Bitcoin Spot ETFs.
So let’s start with the pros.
Safe.
Many people were very interested in this curious, but it was complicated and difficult to purchase it.
But now these ETFs are available and they are just like any other ETF that everyone is familiar with purchasing in a regular brokerage account.
They’re incredibly cheap, 2025 basis points cheaper than Coinbase or other cryptocurrency exchanges and being in a brokerage account, you can rebalance, you can pay dollar averaging, you can lose fees, Harvard.
It’s simple, easy to manage, just like any other unprecedented asset class.
And this makes it more available to everyone than ever.
So, what about the cons here?
Well, the cons are that it’s still Bitcoin, which means it’s still very volatile, it’s still very risky.
You could still lose everything.
We have regulatory uncertainty.
Uh, there’s still lawsuits, there’s still a lot of fraud out there.
So you have to be very careful and a lot of people get into this because of FOMO, you know, they’re afraid that, you know, all my friends are doing this.
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So I really need it too.
And that’s a terrible reason to invest.
So keep your head about yourself.
Stay for the long term.
Don’t over-invest and don’t invest for the wrong reasons though.
It’s the post for the child.
It’s just a cryptocurrency.
I mean, it really encompasses so much market cap for the global coin market cap, but there may be more spot ETFs for other cryptocurrencies coming.
What are the expectations? There are pending applications for Ethereum and the SEC is expected to reject these applications later this month.
But by the end of the year, they may very well say yes after you have the Bitcoin ETF S and the Ethereum ETF S, I’m not sure how quickly you’ll see anything else after that, but these two will open doors long term.
In five years there will be dozens maybe even hundreds of crypto ETFs.
What are the most realistic price targets?
I mean, what you’re hearing for Bitcoin, I mean, we’ve seen ranges from $150,000 by the end of next year to a million dollars.
Michael Saylor says 5 million.
So you’re right.
It’s all over the map.
But what I’ve never seen is how they arrive at those numbers.
So I did the basic calculations myself to try to figure out this calculation that could lead us to this.
It’s extraordinarily simple.
If you take a look at the global assets of the world, the value of the stock market, globally, the bond market, the real estate market, the gold market, you just look at all the assets that everyone in the world owns, it’s about 740 trillion dollars.
This is global wealth.
If everyone who owns such assets simply devoted 1% to Bitcoin, this would represent a market capitalization of $7.4 trillion which translates to $420,000 per Bitcoin.
This is seven times more than the current price.
So just simple arithmetic.
Now, of course, everyone will allocate 1%.
Who knows?
This is the answer you need to determine for yourself.
But in theory, it’s easy to see how Bitcoin could grow 5X 10X from its current price.
We were seeing price action based on the cryptocurrency and Bitcoin use case, it seems like it was swinging more just the amount in production we were, we’re still going to hit a 21 million cap.
And so, in the end, it now looks more like gold rather than just printing money on it.
You’re exactly right.
The Bitcoin use case.
While it’s strong for broadcast, it’s not the strongest argument.
Now it’s like gold, a store of value.
We have Ethereum, Solana, Polygon and Al Goran.
We have other coins for commercial use applications.
Bitcoin is increasingly seen as a store of value like gold, such as works of art and collectibles.
And there is a lot of interest in this, to the point that institutional investors are increasingly adding it to their portfolios.
Rick Edelman, founder of the Digital Assets Council of Financial Professionals and author of the best-selling book The Truth About Crypto.
Thank you so much for joining us in the studio.
My pleasure.