Should I Buy Crypto?

I get asked this question a lot. “Should I buy Crypto?” Typically, it’s from a friend or family member. Usually, it’s accompanied by, “One of my friends is in crypto and he’s making a lot of money and said I should go in too. Should I?”

Whenever I get asked this question, my gut reaction would be to say, “Yes!  Definitely!  Crypto is a revolutionary technology that is changing our communications and assets.  Go long.  We are early days.  All crypto assets are barely $2 trillion, not even yet the value of Apple.  There’s much to go and hop on board.”

However, this assumes a bunch of things, and I hold back.  First, I’m not an investment advisor (legal disclaimer — this is not advice) and there so there are legal issues to advising.  But, more importantly, any asset allocation or investment decision cannot be made in isolation.  Anyone who says, “Should I buy X?” is not providing enough information.  What is the person’s net worth?  How much are they thinking of buying?  What are their investment goals?  What are other source of income?  Where doe crypto fit in?”  Without this context, it’s really not possible to answer this question accurately.

Then, there’s an emotional side.  Crypto’s volatility is shocking when compared with most other asset classes that people own: real estate, stocks, bonds, etc.  There are days that crypto goes up by 10% points, and days that it drops.  Bull and bear markets come faster.  There are few people, who are not either professional/significant investors, or into crypto, who can stomach this.  The natural tendency is to sell low, when all seems bad, and then be happy that you got out when you could.  This is actually pretty rational for people who have goals of capital preservation and are seeking modest returns to fund their investment goals.  And, if you said to buy crypto, you will be blamed, and viewed poorly.

So, if you have decided to buy crypto, and decided it fits in your goals, where do you start?  Well, there are a few options.  Some larger banks are now offering crypto funds to their clients, especially their high net worth clients.  These are typically very simple funds that hold either just one asset (like BTC) or a small market weight mix of the largest crypto assets (like BTC, ETH, SOL, etc.).  While this may seem like a simple solution, with silly-high fees vs. storing in a wallet, for many investors – they are a good choice.  These funds come with custody, tax documents and comfort for many, and those are not insubstantial.  If you do not have access to these funds, Coinbase (and others) offer easy onboarding and the ability to invest in large assets (BTC, ETH, others) and are able to provide customer service and security without having to become a crypto expert.  Their interfaces are very good and they have lots of materials on how to invest and hold.

Beyond that, if you’re looking for DeFi staking or other tokens in the long-tail, you’re already by definition becoming a bet of a crypto expert.  HODL.