Last updated on May 27th, 2022 at 11:00 pm
In 2017, the world saw bitcoin rose from $900 USD to $20,000. It was unexpected. Those who were skeptical about investing in BTC before the all-time price regretted their action.
But in less than two months, that is between January 6 to February 6, 2018, the most valuable cryptocurrency crashed, it fell by 65 percent.
During the 2017 boom, billionaires and millionaires were made while there were also hundreds of bitcoin traders who suffered a cryptocurrency price fall depression.
Remember, altcoins that rose alongside bitcoin during the 2017 boom all lost their sudden value when BTC crashed to a dismal point. The frenzy about crypto slowly died during the time until its come back yet again in 2021.
It’s unpredictable, it’s based on speculations. No one knows what might happen any time.
Generally, that’s how volatile cryptocurrency is. That’s why it’s advisable to only invest the money you can afford to lose.
Factors That May Limit Business Owner From Investing In Crypto
I’ve heard people asking: “Can small business owners invest in crypto-related assets?
Definitely YES, just like an individual who is advised not to invest his entire savings in cryptocurrency, business owners are also cautioned when it comes to speculative assets
Even as you are willing to invest your profit in trading BTC, ethereum, BitcoinCash, Binance Coin, and Litecoin among others, it’s important to note that you might be restricted by some factors which include:
- Government restrictions
- Profit margin
- Past experience
- Fear
- Nature of business ownership
Government Restrictions
Your willingness isn’t enough, you could be restricted by government policies. For instance the Central Bank of Nigeria (CBN) earlier in February 2021 directed financial institutions to stop funding crypto wallets.
While the Security and Exchange Commission (SEC) looked at it from a security perspective by saying bitcoin and other cryptos are volatile, Nigeria’s apex bank claimed that some ‘bad guys’ were negatively exploiting it to launder money.
All these policies affected traders, though they all found their way into P2P platforms like Paxful that wade off government restrictions.
Profit Margin
Before crypto restrictions in Nigeria, you could possibly buy as low as N500 bitcoin on some platforms, but since that stopped, P2P became the next destination point making the amount you can invest a bit higher.
If your business had been investing N500 out of the N3,000 daily you’re making before, and now your business doesn’t as high as that again, then your profit margin is going to restrict you.
Past Experience
In 2017, a friend lost close to N40,000 to bitcoin investment platforms. It affected his business. Since then, he has stayed off cryptocurrency.
While the N40,000 might look minute to someone who lost millions of dollars in the same way and still trading crypto, we must understand that we do not have the same strength to manage crisis.
Fear
Past experience will most likely give birth to fear. Because of what your business lost in the past, fear might hold you down from going back into crypto.
Nature Of Business Ownership
If you operate a partnership, it’s a different ball game when it comes to cryptocurrency investment. If your companies memorandum and article of the association aren’t compatible with crypto investment, you can’t unilaterally dip your hands into the company’s account and invest in crypto.
It must be a mutual agreement. If your business partner is allergic to anything crypto, then you have to invest only your personal income. You can invest company’s profit.
How Companies Can Buy and Sell Cryptocurrency To Make Profits
If you’re not restricted by any of the above factors, then you can consider some of the investment strategies of big boys like Tesla CEO Elon Musk and Jack Dorsey among others.
Do you know their strategy? They don’t invest more than what they can bear to lose. A few months ago, a report by Deloitte detailed how some US companies were allocating a substantial part of their funds to buy virtual currency and other digital assets.
For instance, MicroStrategy, a business intelligence software company revealed that in December 2020 it bought over $1 billion in Bitcoin
Carmaker Tesla also said it purchased $1.5 billion in Bitcoin while Dorsey revealed that he had been buying $10, 000 of bitcoin since 2019 each week.
So, how can businesses buy cryptocurrency?
1) Buy when the price is relatively low and sell when it increases. But you have to do your due diligence perfectly right, to sell when the price favours you.
2) Analyze the market, monitor the trend, learn from what happens in the market, and monitor live prices.
3) Follow industry experts
4) Sign up and use a reliable and safe bitcoin exchange to reduce losses
5) Use a reliable crypto wallet that has been tested and trusted.
6) Don’t jump on crypto freebies on social media platforms
7) Don’t collapse your business finances because you want to invest in cryptocurrency
8) Start small, don’t be carried away by the boom, it’s speculative, so diversify your investments.
Cryptocurrency is volatile, invest with caution.