There is a huge boom going on in the Cryptocurrency space. What is coinciding with that is a huge dip in the stock market. So, while some who invest heavily in crypto are making millions, others who invest heavily in the stock market wake up to find their accounts worth less and less with each passing day.
While the crypto market is sure to slow down in the future and the stock market is sure to pick up eventually, now may be the right time for you to consider putting some money into a cryptocurrency IRA.
But what is a cryptocurrency IRA and what are the main advantages and disadvantages? Let’s break them down together!
What are they?
Unlike traditional IRAs, this is not a specific IRS account designed for crypto. Instead, they are basically referring to an IRA that includes top types of crypto such as Bitcoin, Ethereum, and other exciting technologies.
Since 2014, the IRS has considered crypto as property. This means that coins are taxed in the same exact fashion as stocks and bonds. More recently, companies are allowing investors to include Bitcoin and other cryptocurrencies in IRAs.
One of the best advantages of holding cryptocurrency is that it adds major diversification into a retirement fund. Now, instead of trying to diversify within the stock market, people can diversify what kind of markets they are putting their money into.
That diversity is being seen as a major positive for crypto holders now, who are seeing huge gains while those who invest in the stock market are losing money day by day.
Another major benefit is that a lot of this technology is still in the discovery phase. Believe it or not, there are some out there that believe that one single Bitcoin will soon be worth hundreds of thousands, if not millions of dollars. If that turns out to be true, its price hovering around $55,000 today may one day be seen as a huge discount.
The major thing to be aware of when investing in cryptocurrency of any kind is that individual coins – and the market – as a whole can be very volatile. Coins can drop huge percentage points in a matter of minutes as major sell-offs can occur or a single news story can impact global confidence. While investing in the stock market is seen as a safer play, the world of crypto is definitely high-risk and high reward.
Beyond that, some forms of crypto can be really difficult to buy and can require huge energy amounts in order to carry out transactions. This has doubters wondering if any crypto – even Bitcoin – will ever be able to be applied to the real world. Until that change occurs, it is possible that crypto could go completely belly up.
Ultimately, it is still perhaps too early to know how valuable crypto will be. However, if you believe in technology, there is no doubt that now is the time to start buying.