Bitcoin and other cryptocurrencies are possibly the most interesting investment happening today. If you invested in Bitcoin in 2010 and invested $5000, you’d be worth more than $885 million right now. Using a more recent example, if you invested $5000 into Bitcoin in 2015, it would be worth about $150,000 today.
To give you some really recent examples, investing in Bitcoin on April 1, 2020 would have netted you a 42% gain. And if you invested three months earlier, you would have made a percentage gain of 125%. There’s nothing wrong with more than doubling your money, right?
Are you beginning to see the power of blockchain investments? Are you starting to see why so many people have gravitated to cryptocurrency? At this stage of the game, it’s undeniable how lucrative this investment can be.
Becoming a Bitcoin investor is the equivalent of putting your traditional investments on steroids. You can undoubtedly make good money on the stock market. And for your sake I really hope you do. But if the last three months has proven anything, they showed us that the stock market is far from stable. You feel it today and felt real pain in the middle of March when your investments dropped by nearly 40%.
It’s time to take action and make alternative investing a top priority. It’s time to finally invest in Bitcoin and other cryptocurrencies.
Would you like to learn how to invest in Bitcoin? We’ll teach you our favorite strategy today. Before we begin, we’ll learn more about Bitcoin, discover why it’s a great investment, and learn about the pitfalls too.
The Potential Pitfalls of Investing in Bitcoin the Wrong Way
Just like every investment opportunity, there’s a right way and a wrong way to invest in cryptocurrency. Our one and only recommendation is to open a Bitcoin IRA. Not only will you capture the full power of this investment, you’ll earn massive wealth in a tax-free cryptocurrency IRA.
On the flipside, you can plow all of your money into Bitcoin and make solid returns. But you will not necessarily capture the full benefits of this investment. We want you to capture the biggest profits and set up a rewarding retirement nest egg for your future.
With that in mind, we’ll now look at the various ways to invest in Bitcoin. But we believe these options are the wrong way to create a fruitful investment strategy. Keep reading to discover these potential Bitcoin pitfalls to avoid.
1. Buying Standalone Bitcoin on Cryptocurrency Exchanges
First and foremost, the typical way the average investor buys Bitcoin is through standalone opportunities. They’ll download a trading app like Coinbase and make a deposit to begin investing in coins. Other exchanges include Binance, Coinmama, and Gemini.
Since the price is so high, many people begin by investing in fractions of coins. You have to start somewhere, right?
After opening your account, you’ll need to deposit money and provide your personal information to get started. After you’ve added all of your personal information and make your first deposit, you can start purchasing Bitcoin right away.
At this point, Bitcoin is going to trade like your typical ETF or stock. Your value will go up and down based on price performance and you can buy, sell, or hold your investments at any time.
As far as investments go, this definitely isn’t the worst way to purchase Bitcoin. It’s a solid way to begin an investing strategy. But it’s just not the best way.
As we’ve mentioned, the best way is to open a cryptocurrency IRA and capitalize on the power of tax-free investments. Remember to read our reviews of the best Bitcoin IRA companies doing business today.
2. Greyscale’s Bitcoin Investment Trust (GBTC)
As an investment strategy, putting your money in GBTC is potentially lucrative when done the right way. How? It’s possible to invest in this fund as part of a Roth IRA, otherwise known as a Bitcoin IRA. You can also purchase it through a brokerage or investment account, but that strategy will not provide the biggest tax advantages.
Why are some investors gravitating toward GBTC? In a nutshell, the shares in this trust appreciate based on the way the price moves. So if the value of Bitcoin is rising, the share price will also rise. And if the value of Bitcoin falls, the share price will also fall. It basically mimics the way that Bitcoin trades.
Now that you better understand GBTC, it’s time to discuss the major pitfalls of this option. Overall, you gain the benefits of Bitcoin price movements but you lose all of the other benefits of this investment.
By investing in grantor trust shares as opposed to real Bitcoin, you lose the following benefits of this digital currency:
- Minimal transaction fees
- The deflationary nature of Bitcoin
- Easy to use and trade nearly everywhere in the world
- Merchants benefit from a simple way to receive international payments
- It’s a completely decentralized currency
- No government, financial, or federal intervention
As you can see, the benefits of Bitcoin investments are numerous. The biggest problem with GBTC fund investing is you don’t actually own the digital currency. You own grantor trust shares and nothing more. Even worse, the fund managers charge a 2% yearly fee. They’ll take their payment directly from your account at the appropriate time.
3. Stockbroker Accounts
You can quickly and easily open a traditional stock brokerage account and begin trading in Bitcoin right away. Some brokerages like Robinhood and TradeStation let their customers buy and sell Bitcoin for free without additional transaction fees. That doesn’t seem too bad, right?
You may think the ease and convenience of buying Bitcoin through your brokerage account is the best choice. In our opinion, it’s actually one of the worst options.
Why do we feel this way? You will experience all of the volatility of owning Bitcoin without capturing any of the major tax benefits. And buying Bitcoin through traditional brokerages usually turns people into traders, not long-term investors.
As Warren Buffett, Benjamin Graham, and other investors have proven throughout the years, it’s best to buy and hold an investment you believe in overtime. That’s how you’ll capture the biggest gains. That’s how you can turn a $5000 investment into $150,000 or more if you play your cards right.
4. Other Bitcoin Pitfall Investment Opportunities
As cryptocurrency becomes more popular, more and more ways to invest become available. Some newer little-known options include:
- Trading Bitcoin futures – trading in futures is incredibly volatile and seriously dangerous. Oil futures traders learned this lesson the hard way not too long ago. They didn’t realize that futures prices could go negative and many investors lost millions of dollars. Big dog investment firms crushed oil prices and drove the market so low that the little guys lost their shirt. Don’t be a fool and avoid Bitcoin futures investing like the plague.
- Peer-to-peer Bitcoin purchases – it’s possible to buy Bitcoin from an investor without going through a currency exchange. LocalBitcoins.com is a good place to go if you’re interested in this investment. But buying this way offers no protection whatsoever. It’s similar to buying stuff on Craigslist. You’re taking a chance and the potential to lose your money is great.
- Bitcoin ATMs – this operates similar to a regular ATM but it also lets you sell and buy Bitcoin too. There are currently 3000 Bitcoin ATMs available in the US. It’s relatively safe but you still miss out on the tax advantages offered by a cryptocurrency IRA.
Opening a Bitcoin IRA: The Best Way to Invest in Cryptocurrency
When anyone asks me how to invest in Bitcoin, I always recommend opening a Bitcoin IRA account. At this point, it shouldn’t shock you to learn why I gravitate toward this style of investing. The benefits of investing through an alternative IRA account are numerous and very lucrative.
In fact, the biggest benefits of a cryptocurrency IRA include:
- Complete investor transparency – when you invest in Bitcoin, you get full transparency about this currency. No one is trying to hide anything from anyone, unlike the Federal Reserve. That secretive organization doesn’t even want the president of the United States to know what they’re up to.
- Investor interest is at a premium right now – major financial firms on Wall Street, big governments, and large corporations have all begun to use Bitcoin for digital transactions. This interest from the biggest organizations in the world will continue to drive up the value of Bitcoin throughout the years.
- It gains value during tough economic times – this past month alone proves that Bitcoin isn’t tied into traditional economies. While the US and world stock markets tanked the value of Bitcoin rose by more than 42%.
- Tremendous tax advantages – the tax-free deductions are the major benefit of contributing to a Bitcoin IRA. Everything invested within this account grows completely tax-free. When the time comes to take your earnings at retirement age, you’ll keep everything you’ve earned in this account. You do not have to pay additional taxes to the IRS, which is huge for retirement growth potential.
Do you finally see the light? You’ve determined that Bitcoin is a solid investment at this point. But the only intelligent way to invest in this digital currency is through a cryptocurrency IRA. It’s the perfect way to earn tax-free profits as you stockpile crypto and prepare for a stress-free, lucrative retirement.
We’d like to invite you to read about the best Bitcoin IRA companies doing business today. We’ve reviewed three of the top companies in the industry. Our #1 recommendation is Regal Wallet. Find out more about them and the others by reading our reviews.