Overnight, Bitcoin slightly dipped below $30,000 but quickly rebounded, currently sliding along the $30,000 mark.
A discussion about the entry barrier for cryptocurrency investment has sparked a debate in the overseas crypto community. It began when a newcomer asked a prominent figure how someone with just a few thousand dollars could start investing in crypto. Should they invest in Bitcoin, Ethereum, meme coins, or altcoins that outperform Bitcoin? Is it reliable?
The prominent figure responded succinctly: “Go find a job.”
Why? As mentioned in the previous “Earnings ability is the best alpha“ article.
The conversation seemed to be on track until another KOL, a former partner at a crypto fund, made a statement that stirred the waters.
He stated that you might need over $10 million USD to quit your job and independently start investing. Perhaps you could survive with less money, but your safety margin would decrease. It’s better to work while investing.
The $10 million USD entry barrier indeed caused a sensation. Especially considering that a few years ago, there was a statistic claiming over 600 million Chinese people earned less than 1,000 RMB per month.
For someone like me, who can’t even spare 1,000 RMB per month, talking about a $10 million USD entry seems out of reach.
However, the individual clarified that this is the standard for full-time independent investment. For most newcomers, it’s best to focus on earning money through work.
Turning 1,000 RMB into 2,000 RMB might require a 100% investment return, which is difficult for many newcomers to achieve.
But increasing your off-work earnings is relatively easier. It’s like raising your monthly income from 1,000 RMB to 2,000 RMB, which is not as challenging.
Thus, when your capital is limited, it’s not worth quitting your job to invest full-time in cryptocurrencies. Small capital means higher risk, and high leverage can lead to liquidation. Profits might not be significant, and it would consume a significant amount of energy, resulting in more losses than gains.
The best strategy at this point is as follows: focus on improving your earning ability and skills outside of the crypto market.
Many investors in the crypto community quit their jobs early to trade full-time. However, this might not be the best approach.
But does one truly need over $10 million USD as an independent investor?
The key lies in financial independence. According to the FIRE (Financial Independence, Retire Early) theory, as long as your assets exceed 4% of your living expenses, you can consider yourself financially independent and retire early.
For example, if your total annual expenses are $200,000, you would need assets of $5 million to achieve FIRE.
Even if you’re fully committed to crypto investment, it doesn’t mean you should engage in it non-stop. Often, the more you trade, the fewer profits you make, and you might accidentally fall into the harvesting range designed by predators.
If you treat crypto investment as a professional endeavor, it may require a high entry barrier. However, if you view it as a wealth management tool, don’t dismiss it just because your initial capital is small. Wealth management often requires an early start and consistent efforts to accumulate results over time.
We believe that the power of crypto lies in making finance more inclusive. Bitcoin’s vision is not about the mutual exploitation among a few wealthy individuals. The true strength comes from widespread adoption, allowing even the poor to participate and benefit from it, which is the true source of currency’s new power.
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