My Thoughts on Cryptocurrency


The first thing is to understand that blockchain technology or distributed ledger technology is not cryptocurrency. Distributed ledger technology is used by some cryptocurrencies but there are many other applications for it. If you think that there is great potential in the technology, it should not be directly translated into a bullish view of any particular cryptocurrency.

It would be like seeing that there is great potential in mobile device technology 20 years ago and taking a bullish bet on Nokia. Similarly, it would be a 50-50 bet on any cryptocurrency now as there will be many new cryptocurrencies which will be created in the future. Are you able to pick the 'Apple' from all the cryptocurrency out there?

A long-term investment strategy probably will not work well on cryptocurrency. Buying a basket of cryptocurrencies or possibly crypto-ETF in the future does not reduce the risk as cryptocurrencies' price are highly correlated. The approval for crypto-ETF and currency crisis may be good news for the cryptocurrency in the short-term. My view is that only short-term strategies should be adopted for cryptocurrency such as scalping, swing trading, arbitrage etc.

Since a short-term approach does not align with my investment philosophy, I will not be adding cryptocurrency to my portfolio in the near future.


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