Blog | Cryptocurrency

Should You Be Bullish of Bearish on Ethereum?

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One of the reasons so many people get burned in the stock market or Cryptocurrency market is because they start buying as they see prices going up. Most of us remember the insanity of the dot-com bubble in the late 1990s. From 2000 and 2005, it was the real estate bubble. Today as I write, it's gold, silver, Bitcoin and Ethereum.

Once gold passed $1,800 an ounce and silver broke $23 an ounce, many of my friends came to me and said, "Oh, now I understand what you've been saying about gold and silver. Tell me where I can buy some."

I'm afraid the only thing they understand is that the metals' prices are going up, and as famed investor Warren Buffett says, "The dumbest reason in the world to buy a stock or gold, silver, oil, Barbie dolls, or Mickey Mantle cards is because the price is going up."

One of the key words Buffett often uses is the word understand:

"Investment must be rational. If you can't understand it, don't do it."

Currently, I've been recommending that people look gold, silver, Bitcoin and Ethereum. I'm excited about silver because as I write, it's relatively inexpensive. I'm also excited about silver because unlike real estate,which can require a lot of money, some finance skills, lots of due diligence and property management skills to do well. But silver is affordable to the masses, and management skills are minimum. Buy some silver, put it in a safety deposit box at a bank, and your management nightmares are over.

Today, for less than $20, anyone can get into the silver speculation game.

On top of that, silver is easy to buy and maintains great liquidity. All you have to do is find your neighborhood coin dealer and start trading.

My question is: Do you understand silver? Do you know why silver is a good investment? Do you also know why it's a bad investment?

If you don't know the answers to these questions, I would recommend that you stick with what you understand.

In the past I’ve compared gold to Bitcoin and silver to Ethereum. If you want into metals, the cheap way is silver – compared to gold. If you want to get into cryptocurrencies Ethereum is the bargain – compared to Bitcoin.

But, understand or walk away.

To help you understand crypto-investing, I'll let Jeff Wang explain.

Jeff Wang

Right now the big question on many crypto-investors is, “What is the better investment, Bitcoin or Ethereum?”

Many are probably wondering which one they should “root” for, or rather, which one has more upside out of the two (but really, “which one should I buy!?”). In my opinion, they both have a lot going on. We talked in a recent blog why both were going to surge in November (which happened) but which one has the advantage over the other?

Let’s talk through a few points:

What Bitcoin has going vs Ethereum

  • Name recognition, most people only know of Bitcoin and nothing else

  • Media recognition, it’s all over the place now (which are signs we are near a top), so, everybody knows about it

  • Institutions think of Bitcoin more so than other currencies as a dollar/inflation hedge

  • Limited supply. There are only 21m Bitcoins ever to exist. Currently we’re at 18.55m. However, I prefer market cap as a more accurate assessment of total value.

What Ethereum has going vs Bitcoin

  • Ethereum 2.0, has a roadmap of exciting updates coming

  • As a part of Ethereum 2.0, much ETH will be locked up to stake, reducing the supply of ETH and pushing up the value.

  • Much smaller market cap, even if Ethereum goes 5x in price, it would still be valued less than Bitcoin currently (this has closed from 6x, Ethereum is outpacing Bitcoin this year in growth, as predicted).

  • Decentralized Finance (DeFi) is primarily on Ethereum, nothing else has come close on the other blockchains yet in terms of ecosystem and adoption.

I’ll acknowledge that the market cap point carries to other altcoins, which means that other coins have even higher upside than Bitcoin and Ethereum, however, my vote is on Ethereum for all the reasons mentioned above.

I think they will follow each other directionally, but Ethereum is already up much more than Bitcoin from a percentage this year. I would think of Bitcoin as a “dollar weakness” indicator, and Ethereum as an “index fund” of cryptocurrencies.

Robert Kiyosaki

So that's a simple explanation of what Jeff understands about Ethereum and why he is currently bullish but aware of a bear right around the corner.

Do not by Ethereum because Jeff said so. You must understand first. Do not be a lazy investor. You want to invest in silver, get educated. You want to invest in Ethereum, get educated. So many investors spend more time researching which vacuum cleaner to buy than they spend researching their investing. If you feel you do not understand and it is too hard to understand, then do not invest. You will be a sheep being handed to the wolves.

If you are too lazy to learn yourself, then buy mutual funds and save money. Your money will probably disappear, but slower than if you invest with no education. Warren Buffet was right, "Investment must be rational. If you can't understand it, don't do it."

Original publish date: December 02, 2020

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