How to start investing in crypto: Strategist

Ric Edelman, founder of the Digital Assets Council of Financial Professionals, joins Wealth! to explain how first-time investors should enter the cryptocurrency market.

He points to spot bitcoin ETFs as a great place to start: "They're just like any other ETF, which everybody's familiar with. Buy them in an ordinary brokerage account. They're incredibly inexpensive." He warns that Bitcoin (BTC-USD) is still very volatile, so investors should "stay focused long-term, don't over-invest, and don't invest for the wrong reasons."

Edelman explains that more cryptocurrency ETFs will hit the market, as ethereum (ETH-USD) currently has several applications pending. "I'm not sure how quickly you'll see anything else after that, but [bitcoin and ethereum] will open the doors long term. Five years from now, there will be dozens, perhaps even hundreds, of crypto ETFs," he adds.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Melanie Riehl

Video transcript

Well, if you're curious about getting into the crypto market but still wary of the volatility and the safety concerns surrounding owning digital assets.

Our next guest suggests that spot Bitcoin ETF S may be the right route for you.

Joining me now to explain, we've got Rick Edelman, founder of Digital Assets Council of Financial Professionals and best selling author of the Truth about crypto.

Welcome in Rick.

Great to see you in person.

You too good to be with you today.

Absolutely.

So let's break this down a little bit further here.

Some of the pros and cons of investing in Spot Bitcoin ETF.

So let's start with the pros.

Sure.

A lot of people have been very interested in this curious, but it's been cumbersome and hard to buy it.

But now these ETF S are out here and they're just like any other ETF which everybody is familiar with buying in an ordinary brokerage account.

They're incredibly inexpensive, 2025 basis points cheaper than going to say Coinbase or other crypto exchange and being in a brokerage account, you can rebalance, you can dollar cost average, you can tax loss, Harvard.

It's simple, easy to deal with just like any other asset class unprecedented.

And that's making it more available to everybody than ever before.

So, what about the cons here?

Well, the cons are, it's still Bitcoin, which means it's still very volatile, it's still very risky.

You could still lose everything.

We have regulatory uncertainty.

Uh, there are still lawsuits, there's still a lot of fraud out there.

So you've got to be very careful and a lot of folks just get in on this because of FOMO, you know, they're, they're afraid that, you know, all my friends are doing it.

So I really need to as well.

And that's a terrible reason to invest.

So keep your head about yourself.

Stay long term.

Don't over invest and don't invest for the wrong reasons though.

It's the post to child.

It's just one Cryptocurrency.

I mean, it really encompasses so much market cap for the global coin market cap, but there could be other spot etfs for other cryptocurrencies to come about.

What's the expectation there, there are applications pending for Ethereum and where it's expected that the SEC will reject these applications later this month.

But by the end of the year, they may very well say yes after you have the Bitcoin ETF S and the Ethereum ETF S, I'm not sure how quickly you'll see anything else after that, but these two will kind of open the doors long term.

Five years from now, there will be dozens perhaps even hundreds of crypto etfs.

What are some of the most realistic price targets?

I mean, that you're hearing for Bitcoin, I mean, we've seen ranges from $150,000 by the end of next year to a million dollars.

Michael Saylor says 5 million.

So you're right.

It's all over the map.

But what I've never seen is how they get to those numbers.

So I did the basic arithmetic myself to try to figure this arithmetic that could get us to.

It's remarkably simple.

If you take a look at the world's global assets, the value of the stock market, globally, the bond market, the real estate market, the gold market, you just look at all the assets everybody in the world owns, it's about $740 trillion.

That's global wealth.

If everybody who owns those assets were to simply allocate 1% to Bitcoin, that would represent a market cap of $7.4 trillion that translates to 420 grand per Bitcoin.

That's seven times more than the current price.

So just simple arithmetic.

Now, of course, is everyone going to allocate 1%.

Who knows?

That's the answer you've got to determine for yourself.

But theoretically, it's easy to see how Bitcoin could grow five X 10 X compared to its current price.

We used to see price action based on the utilization case for Cryptocurrency and Bitcoin, it seems like that swung more just to the amount in, in production that we were, we're gonna cap out at 21 million anyway.

And so at the end of the day now it's looking more like gold instead of like just printing money over it.

You're exactly right.

The use case of Bitcoin.

Although it's strong for transmittal, it's not the strongest argument.

It's now like gold, a store of value.

We have Ethereum and Solana and Polygon and Al Goran.

We have other coins for commercial use application.

Bitcoin is really increasingly being regarded as a store of value like gold, like artwork like collectibles.

And there's a lot of interest in that to the point where institutional investors are increasingly adding it to their portfolios.

Rick Edelman, who's the founder of Digital Assets Council of Financial Professionals and best selling author of The Truth About Crypto.

Thanks so much for joining us in studio.

My pleasure.