Hey👋, I’m James and welcome to SCALE 89. My goal is to provide easy to understand info about stocks, crypto, and high growth investments. SCALE 89 is based on my 8 years of experience working in high growth technology companies. This is a special free article about 5 Reasons to Invest in Crypto. Thank you for reading and sharing SCALE 89 and you can subscribe right here:
Last night I was out with friends for a dinner and I ended up talking about crypto with my friend Chris. He is hesitant to invest in crypto and prefers large funds like the Vanguard Total Index. Our conversation reminded me that many people are still on the fence about new or high growth investments. They tend to view these new investments as “too risky".” Only 10-11% of Americans have any money in crypto so here are my top 5 reasons you should consider crypto in your portfolio. Please read my full disclosure at the end of the article.
5 Top Reasons To Consider Crypto
1. Institutional Support
We are seeing a big uptick in institutional support for Bitcoin and Ethereum. This means that large funds, banks, hedge funds, and endowments are buying crypto in large amounts. Some of the most respected portfolio managers are coming out and talking more about Bitcoin or Ethereum. It seems like the vast majority of these funds are buying in some capacity and helping push crypto more mainstream. The support from these large funds have helped Bitcoin and Ethereum reach new All Time Highs in the past couple weeks. This shift in support is very significant since these funds manage billions of assets and move markets.
Almost daily I see news that another large company is moving into the crypto space. There is news that Mastercard is integrating crypto into it’s network so thousands of banks and merchants can offer crypto. Mastercard is making it easier for Bitcoin and Ethereum to be integrated into digital wallets, credit / debit cards, and loyalty programs. This is another example of a large company making crypto more mainstream and easier to access. I can see loyalty programs being big for crypto so you might get 1-3% back on your purchases in Bitcoin or Ethereum. Some of these cards already exist and I have a Bitcoin credit card. Again, these large companies are just making crypto go more mainstream to the average person.
We’ve now hit a critical mass of institutional engagement [in crypto]. Everyone from the major banks to PayPal and Square is getting more involved, which is a loud and clear signal that crypto is now an official asset class. - Michael Novogratz, CEO, Galaxy Digital Holdings
2. Crypto in Apps
We are seeing more popular applications add crypto to help more people buy Bitcoin, Ethereum, and others. Cash App from Square is now a popular option for buying Bitcoin and Square says over 70 million people are using Cash App. They have built this right into the main interface so when people use Cash App, it is very easy for them to also buy or send Bitcoin. Venmo has also added popular cryptos like Bitcoin, Ethereum and Litecoin. Just like Cash App, when you log into the new version of Venmo, crypto is one of the main buttons in the app. They are both making it easy and simple to start a position in crypto. Other apps doing this are PayPal, Public, and SoFi which helps crypto access more users.
Why does this matter?
Cash App, Venmo, and PayPal were traditionally used for sending USD to people or businesses. It has become the norm to send money digitally for meals, bills, trips, or even rent. These applications are used by millions of people and now they are making it easy and simple to buy or send crypto. This helps with mass adoption since in the past, you would need to create a new account with something like Robinhood or Coinbase in order to buy Bitcoin or Ethereum. Now, these millions of people can just use their existing account with Venmo or the others to start buying cryptos. These apps are making crypto mainstream.
“What inspires me the most [about bitcoin] is the community driving it … It reminds me of the early internet.” — Jack Dorsey, CEO of Twitter and Square
Cash App makes it easy to buy Bitcoin and popular stocks
ETFs (Exchange-Traded Funds) are extremely popular ways to invest and the average person tends to prefer large funds over individual stocks. A number of institutions have been working to create Bitcoin and Ethereum ETFs. In the last week, the first Bitcoin ETF called BITO was released by ProShares. In the first day of trading the fund did over $500 million in trading so it shows how much interest there is for Bitcoin ETFs. Keep in mind that the BITO fund is for futures, so it does not buy Bitcoin directly.
ProShares Bitcoin Strategy ETF (BITO) is the first U.S. bitcoin-linked ETF offering investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way. The Fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts. - ProShares Website
There are rumors that a Bitcoin spot ETF will be available in the next 12 months and this is a fund that directly buys Bitcoin. I am also seeing rumors about Ethereum ETFs in the coming months as well. Grayscale has a number of crypto trusts that are popular ways to get crypto exposure like GDLC, ETHE, and GBTC. Grayscale has announced plans to convert the trust into an ETF. I am invested in the popular crypto trusts from Grayscale and they are an easy way to get exposure to crypto in your brokerage account.
4. Network and Marketing Effects
When you use an app or product that you like, you will naturally tell your friends and family about it. This creates a network effect and helps the app or product grow quickly. Many apps also use incentives or referral pay-outs to expand their growth as well. The same thing happens with cryptos. If you invest in Bitcoin and your investment goes up (which has been the case for almost everyone now), you will naturally tell other people. You want to share your experience and talk about your gains. This creates marketing for the crypto and helps it grow. Bitcoin and Ethereum are not companies so they don’t have a sales or marketing team but they do have dedicated and enthusiastic investors who love to spread the word. This is one of the key reasons that these cryptos have done so well over the last 6-8 years. People are telling friends and family, talking about it on social media, writing articles, and creating YouTube videos about their experience. This has helped fuel the growth of cryptos so quickly - viral marketing and social media.
5. The NFT Mania
Celebs, pro athletes and regular people are rushing to buy their first NFT. They are talking about it on social media and changing their profile pictures to NFTs. This is driving tons of money and interest into Ethereum right now. In order to buy an NFT, you need a digital wallet with Ethereum. For some people, they are buying ETH (Ether) for the first time and they rush to purchase a popular NFT. This is further accelerating the network and marketing effects that I just talked about.
NFTs (Non-Fungible Tokens) are rare digital art that lives on the blockchain and you need crypto in order to buy one. The vast majority of NFTs are Ethereum based but there are also some NFT projects on Solana.
You can learn more about NFTs here in my free article:
Big Crypto News
Mastercard is preparing to announce that any of the thousands of banks and millions of merchants on its payments network can soon integrate crypto into their products. — CNBC
42% of institutional respondents said they were most bullish about ETH (Ethereum). — CoinShares
The George Soros’ fund revealed that it holds Bitcoin. “I think it’s crossed the chasm to mainstream.” — Soros Fund CEO Dawn Fitzpatrick
Visa jumped into the NFT Mania and purchased a Crypto Punk for $150,000. This purchase was done using Ethereum. — CNBC
The Bitcoin Futures ETF from ProShares hit the market under the symbol ‘BITO’ with other companies announcing plans for their Bitcoin funds.
Prices from Coinmarketcap.com
SCALE 89 Crypto Portfolio (New Logo Above)
I started investing in cryptos about 2 years ago when I purchased Bitcoin and Ethereum. It started off as less than 1% of my total portfolio. As I learned more and saw gains, I invested more money into cryptos and alt-coins. Right now, crypto makes up about 20% of my total portfolio and my original investment in Ethereum is up over 1,000% or 10X. My original investment in Solana is also up around 10X. I plan to keep buying dips and adding to my positions.
Remember that you can start small and you can invest whatever you are comfortable with. Many popular apps let you invest as little as $5 so it is easy to get started for any budget. My personal belief is that crypto should be at least 3% of your total net worth but please remember that cryptos are volatile and have risk. Always do your own research and due diligence.
Disclosure: Not Financial Advice / Not Investing Advice
SCALE 89 and The Author does NOT provide financial, investment, legal or tax advice. None of my content can be construed as advice. The author is not advising you to buy or sell a security, stock or crypto. This newsletter, article and my tweets are for informational and educational purposes only. By reading my content, you are acknowledging that this is not advice. Please note that my positions can change at any time.
I currently own shares of crypto trusts: ETHE, GBTC, & GDLC
I currently own Bitcoin, Ethereum (Ether), Solana, MATIC, SushiSwap, Uniswap, Polkadot, Shiba Inu, Cardano, Hedera Hashgraph, & BNB.
My positions can change at any time.