Anyone moving their investments to Bitcoin?

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Anyone moving their investments to Bitcoin?

Greg Moore
Rental Property Investor · Tampa, FL · Member since 2019 · 128 posts · 166 votes

After watching a YouTube video from Ken McElroy stating 2020 is a wash, 2021 is the time to save up, and 2022 is likely the time to buy (when properties shift from motivated sellers to foreclosures to REO) I decided to redirect some recent Real Estate proceeds out of a 1031 into BTC.

My question is how much Cryptocurency do you personally feel is the right percentage for your investment mix (that is, if you have crypto)?

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y

I prefer Stanley Nickels and Schrute Bucks

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  • Jacob Menke
    Rental Property Investor · UT · Member since 2019 · 2 posts · 6 votes
    5y

    I love that this thread was started 7 months ago and Bitcoin has nearly tripled in value in that time. I am pretty optimistic about it. With more and more institutional investing jumping onboard, the halving, and now you can buy Bitcoin with Paypal or the Cash App or Robinhood is making it even easier for people to jump in with any size investment.  Paypal is even waiving fees for trading it until the end of this year. 

    I am concerned about the value of the dollar with these large stimulus packages where we just keep printing money. Hence the interest to expand my assets either in Crypto, RE, or Stocks. 

    4Reply
  • Gualter Amarelo
    Investor · Fall River, MA · Member since 2014 · 399 posts · 300 votes
    5y

    @Greg Moore i have friends who are big into the crypto universe and I am heavily invested in bitcoin and etherium.

    That said, it doesn't hold more than 10% of my wealth and it is extremely volatile.

    I started out with the equal amount of Tesla 6 months ago and my Tesla shares have increased 4 times that of bitcoin.

    My advice is to just keep lookong for better real estate deals and keep some of your cash in the good old greenback as well...

    There is nothing like being able to pounce on the good deals when everyone else is stuck in an asset that just went belly up!

    1Reply
  • Gualter Amarelo
    Investor · Fall River, MA · Member since 2014 · 399 posts · 300 votes
    5y

    @Russell Brazil you've got the right idea!

    0Reply
  • Gualter Amarelo
    Investor · Fall River, MA · Member since 2014 · 399 posts · 300 votes
    5y

    @Charlie Chapman lets ride the rollercoaster!

    0Reply
  • Account Closed
    Accountant · Brainerd, MN · Member since 2017 · 17 posts · 11 votes
    5y

    I stay away from what I don't understand. 

    In our fiat system, supply is regulated by the Fed, and printed by the Treasury. In a crypto system, where is the supply coming from? Mining?.... that's a whole 'nother level of questions. 

    Outside of the underlying questions, "investing" in crypto to me seems no different than forex trading... which is a very very active investment in which to make money you must always be actively trading. But it seems so many crypto investors are choosing to buy and hold. Perhaps I don't understand currency trading enough, but I've never met someone that's accrued any significant wealth from a currency buy & hold strategy... 

    But like I said, perhaps my folly is simply ignorance into crypto mechanics. 

    1Reply
  • Dan DiFilippoBusiness Member
    Real Estate Broker · Fayetteville, NC · Member since 2020 · 251 posts · 244 votes
    5y
    Originally posted by @Account Closed:

    I stay away from what I don't understand. 

    In our fiat system, supply is regulated by the Fed, and printed by the Treasury. In a crypto system, where is the supply coming from? Mining?.... that's a whole 'nother level of questions. 

    Outside of the underlying questions, "investing" in crypto to me seems no different than forex trading... which is a very very active investment in which to make money you must always be actively trading. But it seems so many crypto investors are choosing to buy and hold. Perhaps I don't understand currency trading enough, but I've never met someone that's accrued any significant wealth from a currency buy & hold strategy... 

    But like I said, perhaps my folly is simply ignorance into crypto mechanics. 

    You raise a lot of good questions.

    Regarding USD fiat, it gets a little complicated, but most dollar creation is actually done by the banking system via debt.  The monetary base, which is the total of physical notes and usually you also consider reserve accounts at the Federal Reserve, is actually very small at around $10T.  The amount of "wealth" in the world dwarves this amount.  To give you a comparison, there is even a little more than $10T worth just of above ground gold in the world.  Bitcoin clocks in at some $350B.  That doesn't even touch on real estate values, debt instruments, equities, small businesses.  It can get wild.  The Federal Reserve uses other metrics to try to account for how much "money" is in the world, but the system has proven to be so gordian and opaque that it simply cannot be accurately measured.  You may know if it as the shadow banking system; or it's also referred to as the eurodollar system.  Unfortunately, it can't really be worked around.  When economic activity is explosive, there is a natural increase in demand for the currency required to facilitate it.  It's an amazing concept, but essentially currency is the plane upon which economic activity takes place.  But that plane can be expanded as needed through the use of debt or money-like instruments.  And this can be done by actors independent of the central bank.  For example, in the modern banking system, US Treasury's are actually treated as money, they perform monetary functions.

    Crypto currency could be treated in the same way.  Just because the true supply of Bitcoin is very stringently determined (one new Bitcoin mined roughly every ten minutes, no matter how many people are actively mining) does not mean that someone cannot extend the derived supply of Bitcoin through the use of debt (think fractional reserve banking).

    Crypto is still too volatile to be money.  It's still held speculatively.  It's not accept throughout enough of the economy to be considered money.  But it is being adopted both as an investment and also for transactional use.  I recently saw a Bitcoin ATM in a gas station of all places.  Specifically in an area where I would not have expected to see one.  The greater the price and the market cap of Bitcoin become, the more stable it will inevitably be.  For example, if 50% of the people holding Bitcoin right now (let's say they also hold 50% of all Bitcoins) decided they weren't going to buy or sell any more of it for the next 10 years and instead just hold it, the supply of Bitcoin doesn't change, BUT the supply that the market plays around with does.  And the more people hold Bitcoins for longer, the more the market cap increases, meaning it will become less volatile.  As it becomes less volatile, it becomes more viable as a currency.  Because a currency needs to be able to hold its value reasonably well.  That's why the currency markets seem to be so insensitive.  They move glacially.  Because currencies theoretically are worth all of the economic activity that takes place upon their plane plus some a discounted valuation of all of the economic activity that *will* take place upon their plane.  The best FX traders don't trade short term according to charts and signals, but over periods of months and years as they watch large scale economic changes unfold on national and global levels.

    Cryptos aren't nearly there yet.  Some people are liking Ripple for this.  Which has been designed this way and is working to get adoption by the banks to replace the SWIFT system, which is dreadfully inefficient.  It's pre-mined so it doesn't require nearly as much energy in order to be used.  Bitcoin, for being the head and shoulders leader and the progenitor of the space is actually pretty cumbersome as far as cryptos go.  Which makes sense, of course.  One visionary comes up with the idea and creates an ingenious product, but later generations will always have the advantage of hindsight and trial-studies from which they can improve their design.

    It's very difficult to say where the whole space will go.  A "Fed Coin" is a possibility for the future as they try to find a way to maintain control over money.  It would be an improvement over paper as money, but there would be tremendous loss of privacy.  Also, if Bitcoin goes stratospheric and becomes widely adopted, the government won't have an easy time interfering with its value, as investment advisors will likely be advising their clients keep some 5-20% of their savings in it.  So any intervention would be seen as confiscatory.

    I could write on, but allow me to leave it here.  Crypto is almost assuredly the future.  So it's worth learning about.

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  • Alexandre Marques dos Santos
    Rental Property Investor · Member since 2020 · 215 posts · 137 votes
    5y

    @Greg Moore

    Zero. Cryptocurrency is not an investment. If you hold it, how much will you receive in dividends? Or in interest?

    Ok, nothing... So tell me, will you know how much can you sell it on the future for? No? So becomes a gamble...

    Bitcoin is mined everyday. So supply is positive. On the other hand, demand is unknown.. does it grows continuously?

    Finally, new cryptocurrencies are coming to market. So even more supply. I dont like it.

    If illicit money stop buying ( due to regulations), prospect is not good...

    2Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    5y
    Originally posted by @Greg Moore:

    After watching a YouTube video from Ken McElroy stating 2020 is a wash, 2021 is the time to save up, and 2022 is likely the time to buy (when properties shift from motivated sellers to foreclosures to REO) I decided to redirect some recent Real Estate proceeds out of a 1031 into BTC.

    My question is how much Cryptocurency do you personally feel is the right percentage for your investment mix (that is, if you have crypto)?

     Bitcoin is still a thing? Who's still doing this junk?

    1Reply
  • Jacob Menke
    Rental Property Investor · UT · Member since 2019 · 2 posts · 6 votes
    5y

    @Alexandre Marques dos Santos Actually some cryptos like Tezos pay out a dividend (they call it a staking reward). It is currently 4.63%. 

    2Reply
  • Alexandre Marques dos Santos
    Rental Property Investor · Member since 2020 · 215 posts · 137 votes
    5y

    @Jacob Menke

    Thats surprising. Need to read contract, in this case, THIS one becomes a investment, like a stock ( although you cannot rationalize the corporate strategy)

    0Reply
  • Eric Carr
    Real Estate Broker · Los Angeles, CA · Member since 2017 · 658 posts · 293 votes
    5y
    Originally posted by @Alexandre Marques dos Santos:

    @Greg Moore

    Zero. Cryptocurrency is not an investment. If you hold it, how much will you receive in dividends? Or in interest?

    YES! You can get paid interest on BTC and many other crypto assets.  

    0Reply
  • Eric Carr
    Real Estate Broker · Los Angeles, CA · Member since 2017 · 658 posts · 293 votes
    5y

    @James Wise

    Well, a ton of billionaires and billion dollar companies at have bought this year. 

    You might cry if you knew how well I have done with it 

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    5y
    Originally posted by @Eric Carr:

    @James Wise

    Well, a ton of billionaires and billion dollar companies at have bought this year. 

    You might cry if you knew how well I have done with it 

     lol - Tears do not flow from the face of a man who's beard is as exquisite as mine.

    0Reply
  • Alexandre Marques dos Santos
    Rental Property Investor · Member since 2020 · 215 posts · 137 votes
    5y

    @James Wise.

    If i were to be a billionaire, i wouldnt mind to put 1 mio in a pure speculative bet. I could actually spend some in a casino. Unfortunately i am not. So i put my money where i can rationalize.

    Can you tell me why the price is going to go up?

    By the way, tell me which companies are “investing” in crypto. Those are the

    ones i will stop investing as, if it is true they are investing, it shows me they have less corporate governance than i thought so.

    0Reply
  • Patrick McGrath
    Rental Property Investor · Westminster, MD · Member since 2014 · 165 posts · 221 votes
    5y

    @Greg Moore

    2.5-5% is what I have imspread over BTC, ETH, ADA, XRP and NEO. I used to mine until the crash in 2018. My profilio would be over 100k right now if I didn't sell a large chunk last year when btc hit 13800.

    Ride the wave and do you.

    2Reply
  • Greg Moore
    OP
    Rental Property Investor · Tampa, FL · Member since 2019 · 128 posts · 166 votes
    5y

    @Alexandre Marques dos Santos there is an emerging feature of select crypto currencies called “staking” wherein a buy-and-hold investor can earn interest on the portion they commit to holding (eg 32 ETH are required to earn money on the Ethereum network). I haven’t tried it yet because I’m still learning. I think the going rate is 8%, which is the same Pref I look for on my real estate syndications, so it’s becoming more attractive to people seeking interest on their money. Anyhow, thank you for weighing in with your views.

    0Reply
  • Alexandre Marques dos Santos
    Rental Property Investor · Member since 2020 · 215 posts · 137 votes
    5y

    @Greg Moore

    Thank you. Having this feature, makes a bit more sense. The only thing is that you should adjust the return is for the volatility of the price.

    Any asset that have more volatility, should offer a better return.

    What do you prefer? An asset that gives 6% py but you know price will be similar or a bit higher, or receive 8% and have no idea where the price will be?

    If my RE gives me 6% py in return, then the asset you described needs definitely to give a better return.

    Unless you have conviction the price WILL go up. Than you should sell all RE and dive on it.

    Good luck

    1Reply
  • Jason Goretzki
    Fort Lauderdale, FL · Member since 2016 · 214 posts · 95 votes
    5y

    Pre 2019 I tripled my money invested in Bitcoin & got out.  I much prefer dividend stocks. While I believe in the cryptocurancy technology, & am excited for it's growth & increased acceptance, it's not an investment for me.

    1Reply
  • Nick Barlow
    Warsaw, IN · Member since 2017 · 229 posts · 270 votes
    5y

    @Dan DiFilippo for the sake of the conversation, I can’t wrap my head around crypto being a de facto currency as an ever expanding population needs a money supply to expand somewhat with it, or the ensuing hikes to interest rates caused by more and more people chasing a finite resource would decimate the economy.

    I freely admit I haven’t researched this enough, but interested to hear thoughts.

    Full disclosure I don’t have any crypto whatsoever, and think if it becomes as widespread as bullish views want it to be, I could end up accepting rent in BC or sell a property or 2 and convert to BC.

    In theory, rental properties have value in USD, Gold, BC, and foreign currencies. My underlying premise is that value is roughly equivalent, regardless of the medium of exchange.

    2Reply
  • Tyler Halcomb
    Real Estate Broker · Indianapolis, IN · Member since 2018 · 3 posts · 1 vote
    5y

    @Russell Brazil thank you for this

    0Reply
  • Eben Campbell
    Contractor · Fayette, ME · Member since 2020 · 1 post · 0 votes
    5y

    @Charlie Chapman Alpha

    0Reply
  • Jacob Martin
    Investor · Asheville, NC · Member since 2018 · 15 posts · 15 votes
    5y

    @Greg Moore the bulls are always predicting the moon for BTC, don’t make decisions based on blind optimism

    1Reply
  • Dan DiFilippoBusiness Member
    Real Estate Broker · Fayetteville, NC · Member since 2020 · 251 posts · 244 votes
    5y

    @Nick Barlow this gets into the very complicated field of macroeconomics. Which most investors pay no attention to nor are even aware of. But it's about to start mattering really hard pretty soon.

    Without getting too deep into it, any kind of asset can be expanded into more of itself. As I was saying, most dollars are created this way. If Bitcoin can achieve institutional adoption, there will be means by which its supply can be increased to accommodate need.

    There are already cryptos that are interest yielding. Tezos uses a staking system that enables it to bear interest. And Compound uses smart contracts that enable the lending of *other* cryptos.

    I hate to try to make it sound sensational or anything, but it really is an innovative field that has been coming up with answer after answer to the various questions and challenges thrown at it.

    [email protected]910-745-6972
    Brookdale Property Management
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    1Reply
  • Jeffery Callis
    Rental Property Investor · Knoxville, TN · Member since 2020 · 51 posts · 40 votes
    5y

    @Greg Moore

    It’s a sham. Bitcoin is basically penny stocks. More people get ripped than make money.

    FAR to many scams and ways to get your Bitcoin stolen to be comfortable.

    1Reply
  • Aigo Pyles
    Flipper/Rehabber · Memphis, TN · Member since 2020 · 758 posts · 285 votes
    5y
    Originally posted by @Charlie Chapman:

    I just put $100,000 into Bitcoin.  Wish me luck.

     Goodluck!

    1Reply
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