An Experienced Investor's Journey Into Cryptocurrencies

An Experienced Investor's Journey Into Cryptocurrencies

I’ve gone from a critic, a skeptic, and a detractor of – cryptocurrencies, NFT’s, the Metaverse – whatever name you want to use – to a true believer.  It is an asset class I need to be involved in.  Slowly, surely, and thoughtfully I have made it an important part of my long-term investment portfolio and my trading activities.  I’d like to share my journey.  I hope it will provide some perspective and motivate you to do your own research if you’re not already involved.

First, a little background:  I’m 62 (yep, “old dog – new tricks” immediately comes to mind!) and I have been involved in investing and the capital markets for over 30 years.  My approach to investing and trading activities tends be on the conservative side.  I’m a “classically” trained investor – asset allocation is king and has been the secret to my long-term investing success.  If you would have reviewed my investment portfolio at the beginning of 2021, you would have found all the traditional asset classes (equities, bonds, real estate, commodities, etc.) along with some rather unique uncorrelated assets……but no exposure to coins.  I thought coins were all “hocus pocus” with no future.  The only question in my mind was who was going to be left holding the bag when the music stopped.  There’s a line from a semi-famous movie that was very applicable to me: “we mock what we don’t understand”!

Why was I Hesitant to Invest in Coins?

There were times over the last several years that I thought about throwing some money at coins – just buy some Bitcoin! What’s the worst that can happen? I saw all these guys making money – fear of missing out was kicking in….I had to just do something.  But to be honest, that didn’t sound like a much of a plan and I really didn’t know where to start..and thought that maybe the train had left the station without me.  I’m a pretty smart guy but it all seemed too complicated and then there was the Mt. Gox implosion.  Why would I invest my hard-earned money on nothing more than a bet I really didn’t understand or believe in and was, quite frankly, afraid of?  That approach seemed pretty stupid.

I started asking around without much luck – my investment advisor pretty much said “good luck with that”.  I knew a couple of people that were involved but they all seemed to rely on a 20 something kid for advice.  It still wasn’t an asset I was willing to include in my allocation.

Why Did I Finally Enter My First Cryptocurrency Transaction?

Then – finally – something changed.  There are very few folks in the trading and investing industry that I trust and respect.  Jonathan Rose, owner of Masters in Trading, happens to be one of those folks.  In early 2021, he said that he had been doing a ton (literally thousands of hours) of research…and concluded that this space was presenting one of those once or twice in a lifetime investment opportunities.  He offered to share his research and his well thought out approach.  I was clueless as to what he was talking about but now I knew I had to figure this out.

I made my first Ethereum (ETH) purchase in February of this year.  I wanted to take his class and the class required you to pay with ETH (a brilliant move on his part – it forced me to figure a few things out on my own…and he refunded the .1 ETH) …so what choice did I have?  What was the worst that could happen – I buy .1 ETH, screw up the transaction and somehow manage to send it to someone else or the class is a bust! It was a risk I was willing to take.

Having to pay for the class with ETH got me involved.  I needed to figure out how to setup a MetaMask wallet, how to fund an account, how to purchase ETH and how to use that ETH to pay for the class.  I gained quite a bit of confidence from just that small series of transactions and started to get some insight into how coins and the blockchain worked.  I also realized that ETH had value….I just purchased a class with it!!

So this was all well and good….I like a challenge and this initial maneuvering was kind of fun…but was there an investment opportunity?  I took several classes (all from Jonathan) and did some of my own research.  I started to learn more about ETH, why it has value, why that value will increase over time and why the train hadn’t left the station without me. What’s next? Time to make a real investment!

How Did I Make My First Cryptocurrency Investment?

I set up a Coinbase account, transferred some hard-earned cash and bought some ETH!  I was in!  I figured out that through CoinbasePro, I could place limit orders to buy and sell.  Now I could treat this like any other investment or trading account.  I started to form my own investment thesis for ETH, developed an allocation strategy and started building a core investment that I could trade around. I started telling my friends and family – they thought (and still think) that I was drinking the Kool Aid!

Why Did I Make an Investment in NFTs?

So what was next?  I started learning about smart contracts and NFT’s (again, so much of my education was from Jonathan).  This was definitely one of those “explain it to me like I’m a golden retriever” moments.  You’re telling me to buy “art” that exists in computer code on the blockchain….oh ok…sounds like a plan!!???!  Then I learned about Jonathan’s investment in CryptoPunks…..who pays $60,000 for one of the these things????  The same guy who can turn around and sell it shortly thereafter for $600,000+ (if he wanted to) ….now I get it….time to buy an NFT or two.

I bought some more ETH through CoinbasePro, transferred it to my MetaMask wallet, connected to OpenSea and bought some NFT’s (over time…like any good investment allocator does).  The OpenSea thing scared me….I’m going to connect to some Web 3.0 site, connect to my wallet, buy a few NFTs and then have them appear in my wallet and under my account on OpenSea….and not lose all my ETH?  I sweated it out as my transactions were processed through the blockchain…and magically, everything appeared in the right place!  My confidence in my investment thesis continued to grow as the value of my holdings increased and my transactions were processed flawlessly.  However, my friends and family seriously considered sending me for counseling because they thought Mr. Conservative Investor had lost his marbles!

What was My Most Stressful Experience With Cryptocurrencies?

I did have one pretty stressful experience.  From the outset, I understood two things: first, that my investment in ETH and NFTs could go to $0; second, that I could make a mistake and transfer some or all my ETH or NFTs to never, never land (an incorrect address), they would be gone forever, and I couldn’t get them back.  Well for about 4 hours one Saturday in October I thought I had transferred one of my NFTs to someone else and lost about $5,000.  I set-up a hard wallet to more securely store my ETH (and a few other coins) and my NFTs.  I transferred a small amount of ETH to make sure everything worked…and it did…no problem.  I then decided to transfer one of my NFTs.  The transfer went through but I couldn’t see the NFT in my hard wallet.  For four hours, I frantically searched for it.  I thought it was gone forever.  Finally, I figured out there was a third-party app for my hard wallet that allowed me to see my NFTs.  Four hours of regret followed by a pretty big smile.

What’s Next for Me in the Metaverse?

So here I am.  Almost a year into my journey.  Confidence growing.  Comfortable with my risk.  Fully embracing the value proposition.  Investing, trading, researching, learning…..and making a few bucks.  What’s next?  I’m not sure but maybe purchasing some land in the Metaverse….I can just hear my friends and family now….you’re buying what? Where?