How many times people have asked the question: “Is now the time to buy or sell?” The answer is - no one honestly knows. Therefore, given the very volatile nature of crypto currencies, there is considerable logic in ‘drip feeding’ money into this asset class as opposed to trying to guess and suddenly find that the price of the cryptos you have acquired have suddenly fallen like a stone.
Putting money away on a regular basis is sometimes called ‘pound cost averaging’ and works on the principle that when the price of an asset is low (i.e., it has fallen) you buy more, and when it is high you buy less each month. This strategy helps to smooth out the volatility so is ideal for investors who make regular savings. Had you done this and invested $50 per month over the last three years, you would have saved $1,800. Assuming no costs and you had invested in the US Stock Market (Dow Jones Index), your money would be worth $2,239. Yet compared to this further, by putting your $50 per month into Bitcoin it would now be worth $6,925!
Effect of saving $50 per month for three years
The other golden rule of investing is diversification - e.g., not having all your ‘eggs in one basket’ - which is why many investors will have exposure to different investments such as equities, property, bonds, commodities. One digital asset to catch the eye is from Damien Hirst and he has enrolled, no less, the ex-Governor of the Bank of England, Mark Carney, to help promote his latest Non-Fungible Token (NFT) collection. Hirst has created 10,000 physical unique works on A4 sheets of paper called “The Currency”, with each being available to be bought as an NFT and having gone on sale on the 14th July for $2,000 each. Therefore, if Hirst sells all 10,000 he will raise $20million on top of the $22million he made from selling 7,481 prints earlier this year.
The Currency - Damien Hirst
There is a twist, though, with Hirst’s latest NFTs in his press release: “Two months after the NFTs are allocated, collectors will be presented with a choice: to keep the NFT or exchange it for the physical artwork. They will have one year, until 3pm BST on 27th July 2022 to decide to keep either the digital NFT or the physical artwork. If they have not exchanged their NFT in that period, the physical artwork will be destroyed. Similarly, if they have exchanged it in that period, the NFT will be destroyed”
As an aside, does Carney’s engagement in helping promote Hirst’s ‘The Currency’ portend the ex-Governor of the Bank of England’s as a supporter of Digital Currencies, in particular CBDCs?
(NB: Readers are recommended to seek professional advice before taking any action based on any of the links and information above. TeamBlockchain Ltd does not accept responsibility for any action that may or may not be taken, loss or gain. Please remember that the value of investments (particularly Bitcoin) and illiquid ones (such as NFT)s can rise and fall dramatically.)