Bitcoin has suffered a harsh punishment in recent weeks, reaching the verge of losing $20,000 and accumulating so far this year a penalty of almost 70%. Other cryptocurrencies have not fared much better, with Ethereum hovering just above $1,100 after falling more than 35% in the last week alone.
Volatility has always been inherent in the world of cryptocurrencies, but the latest falls have fueled speculation of a new crypto winter, a concept used among investors to refer to a sustained drop in the price of digital currencies. The sharp rise in inflation that some economies are experiencing, especially in the US and Europe, and the fear of a recession have caused a rout in risk assets, and today Few assets seem as risky as digital currencies.
Buffett’s tips for investing
But beyond his criticism of cryptocurrencies, which only time will tell if they are justified, perhaps it is a good idea to go to the advice that the millionaire gives to make his investments, and that if they had been followed, they would have avoided more than one disappointment.
One of the most famous phrases is also the one that best applies to many investors who have launched into cryptocurrency investment without prior training, which is always necessary when jumping into markets: “Never invest in a business you can’t understand”. In the same vein, “the risk comes from not knowing what you are doing,” the Oracle of Omaha also declared.
Buffett is well known for being a long-term investor, so if you don’t share his criticism of cryptocurrencies you can also apply other of his famous tips to not panic. As the tycoon has put it, “be fearful when others are greedy and be greedy when others are fearful”. “If you’re not willing to own a stock for ten years, don’t even think about owning it for ten minutes.”
These are other of the famous phrases that Warrent Buffet has made and that have a lesson for investors in Crypto:
- “If you’ve been playing poker for half an hour and you don’t know who the nerd at the table is, the nerd is you.”
- How much has been said about investing in Cryptocurrencies, NFTs and other digital assets, by investors or apparent “gurus” who really do not know what is behind these technological projects.
- Let’s not forget that cryptocurrencies have their own technological project behind them, those that work and solve problems in society will be worth a lot of money, the rest will be worth nothing.
- How much are they really worth and what are the more than 10,000 Cryptocurrencies for? Only a handful of them will mark the future of technology, blockchain, payment methods… But the rest will be worth nothing and investors will not realize it until it is too late.
There are 3 more phrases, which talk a lot about long-term investment if we are in a good business or in the right technology.
- Time is a friend of good business
- Rule number 1: never lose money.
- Rule number 2: never forget the first rule.
Source: Ambito
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