Can Stocks be Profitable like Bitcoin has been?
To answer the question, if people can make profits like early investors in bitcoin have, we need to consider some factors.
Firstly, bitcoin the daddy of all cryptocurrencies, is reported to be the first cryptocurrency.
In it’s early use following being made available sometime after its creation, the price for 1 whole bitcoin was pretty low.
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Of course bitcoin with ultimately a limited supply relies upon demand to push the price higher.
That demand is well under way over the last 10 years. And the surge is price is spectacular.
Oh boy, how many wish they would have bought some bitcoin back in the days when most people would have laughed at you for investing in some invisible nonsense.
Last year (2021) bitcoin had reached $68,000.
The price has since dropped due to a crypto bear market. However some believe bitcoin could reach $100,000 per x1 coin, if not higher.
Again due to the limited supply which is capped at 21 million. And already about 19 million have been mined.
In 2010 the price of buying one bitcoin (not including fees) was $0.0008 for one token. It blows everyone’s mind, even billionaires today, that a modest investment back then, which is not that long ago, could have turned people into billionaires.
And yes some people have become billionaires solely from their investment in bitcoin. Well good luck to them.
And there are those, who have made many millions from investing in bitcoin too.
Well it seems that the party is over for those interested in trying to make millions of dollars from bitcoin, based on a relatively small initial investment.
I mean, we might see a double or even a triple of the bitcoin price, but it’s highly unlikely and moreover near on impossible that we will see bitcoin multiplying the extreme it has already achieved.
At some point, the price will find its true range and stick within this range. A bit like gold that more or less has a limited supply.
There really isn’t that much gold in the world. It is limited to what has been mined and what could possibly be recoverable based on estimates. And yet gold has found its price to be stuck within a range.
Albeit the price rises overtime, over many years. And then there are dip and fluctuations, all part of the many things that influence the price of gold.
What about other cryptos, if I invest now will I get rich?
There’s two ways of looking at this. On the one hand it’s not impossible that there have been, are and likely could be new cryptos that could skyrocket, multiplying that many times, that would turn your small investment into mind boggling riches beyond your widest dreams.
However finding the right ones if the issue, or big problem. Today (March 2022) there are just too many of them. If you invest in all of them, basically you will have to be already quite well of.
There are well over 12,000 cryptocurrencies and more are added to the market all the time.
I mean, come on, work it out, if you were to say invest $1,000 in all of them, it would cost you $12M.
If you have $12,000,000, I don’t think you would be spending the lot on such a gamble.
Many of these coins and memes will disappear overtime and you will likely lose your investment.
Some will rise a bit, other not so much, others will lose some value. Okay, there will be some that rise a lot and then fall back down again.
It’s really not dissimilar to stocks. And there are over 100,000 stocks in the world.
Ideally, you should be looking at trying to invest in a limited number of cryptos and hope for the best.
Let’s not forget that most of the cryptos out there do not have any intrinsic value. Okay, some do in the sense that they are used to buy goods and services and used as a form of hoarding wealth.
But the vast majority of crypto coins and memes and blockchains etc, are experiments, and in a sense, are triangle-Ponzi type projects based on pump and dump advertising.
You know, the people behind it, buy low, or own the majority of the coins or memes and spend lots of money on advertising to promote their cryptos, and if the public buy in mass, this lifts the price, enough for the insiders to make a fortune.
After they have made their money, they really don’t care what happens to the cryptos.
Now, don’t get me wrong, I am not saying that the intentions of all the people behind cryptos is to make themselves rich.
But you have to ask yourself why are so many cryptos needed?
Thinks about how many countries there are in the world, and fiat currencies, then compare that number to the number of cryptos.
Alarm bells should be ringing in your investing mind guys. Wake up!
When you invest in stocks connected to assets, products, services, property, profits, etc, you own part of those companies, and can receive interest for your investments in the form of dividends, where the companies have grown to generate profits.
When you invest in the invisible hopes and dreams of the masses of people trying to get rich from buying cryptos, you are setting yourself up to fail. It’s not a viable investment strategy you could sell to most people with above average IQs.
But hey it’s still possible to make money buying cryptos?
Well, yes it is and isn’t. As I wrote above, your success if going to be based on big investments and a lot of luck these days.
You could spend months researching every crypto there is, and the new one being added to the market on a daily basis, but I really don’t know what you would be looking for.
You would need to identify some key codes of information that might give you insight to possible future success of particular cryptos.
This research would be costly and time consuming.
You would be looking for growth cryptos, like a little brother bitcoin. Or if you think about stocks as a comparator, the next Amazon or Apple etc.
If you believed in the cryptos you found to invest in you would need to hold on to them for 5 to 10 years to see if they keep rising.
And even if they did, you then have to stop yourself from being tempted at selling those cryptos at such a low price given that the prices could rise a lot.
No doubt there have been people who bought bitcoin at a very low price and sold out too early. Same with Amazon and Apple stock.
Can you make money trading cryptos?
You could make money trading any price action. If you are allowed to short-sell when the price is entering a bear market or pre-crash.
Or you get in then the prices are low and dump when the prices have reached their peak.
You can do this with stocks. If does not have to be solely with crypto. In my opinion, it’s safer to look for value in stocks.
Stocks where the prices are low and you believe will rise. Maybe you are buying post-crash.
Or invest in some growth stocks, sell some and hold the rest in case the stock turns out to be the next Amazon or Apple type of a winning growth stock.
In this respect, stocks can be profitable, maybe not as much as bitcoin has been for those who got in at the bottom and held to the highs.
But looking back through history, we can see that bitcoin one of those rarities you need to put to the back of your mind, otherwise the regrets you never got in or did not know about it when the price was cheap will haunt you and plague your mind.
The good thing about investing in and/or trading in stocks, is that you are going to come across some gems, overtime, and when you are losing money, when you thought you bought the bottom, but the price went lower, the stock price could always rise and the company develops.
With many of the hyped up crypto-Ponzi type situations out there, profits for traders and/or investors are based on factors of other hopefuls investing and losing money when things turn sour.
To me, I view crypto trading (and to a lesser extent investing) as a bit like a poker game.
And you know in poker there are few winners, save the house always wins because they host the games and receive commission.
Therefore who really profits from cryptos?
A few traders and investors, and the crypto inventers who pump funds into advertising and the brokers who make money from the buy and sell trades.
The owners of cryptos, (most of them) and the brokers do not care if you lose money and they have no incentive in making you money.
Whereas with stocks, companies want to do well in order to make money for their shareholders.
And for long-term investors in stocks who compound dividends over many years, this is a more healthy broker/investor relationship.
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