Should I buy crypto amid the recent selloff?

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on May 17, 2021
Updated: May 18, 2021
  • The cryptocurrency sector traded mostly in the red on Monday.
  • Elon Musk confirms Tesla Inc will not be selling any Bitcoin.
  • Bitcoin and Ethereum still officially entered into a bear market.

The cryptocurrency sector traded mostly in the red on Monday while Bitcoin and Ethereum officially entered into a bear market. A bear market is defined as a decline of at least 20% from the all-time highs.

On Monday, Bitcoin price (BTC/USD) was trading near $42,000 which represents a one-week drop of 26%. The price of Ethereum (ETH/USD) was also down around 24% at around $3,150. Among the few cryptocurrencies trading in the green on Monday was Cardano (ADA/USD) which was up around 13%.

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The fall in Bitcoin, Ethereum, and multiple other cryptocurrencies prompted many new investors to take a second look at the space. If you are among the new investors looking to buy cryptocurrency for the first time amid the recent weakness, this guide is for you.

How & where to buy cryptocurrencies right now

Buying cryptocurrencies for the first time is a straightforward task as many reputable brokers started offering clients the ability to buy Bitcoin, Ethereum, and dozens of other coins. If you want to hold a cryptocurrency or multiple cryptocurrencies as part of a diversified portfolio, you will need to open an account with a crypto broker.

Our team of financial experts can safely recommend two cryptocurrency brokers that are best known for its ease-of-use, low fees, and outstanding support.

eToro

Fintech company eToro was founded in 2007 and evolved to become one of the top cryptocurrency brokers in the industry. The platform includes a social element to trading where users can follow the portfolio of expert traders.

Buying cryptocurrency on eToro’s platform is very secure. The company itself was valued at $10 billion as part of a deal to evolve into a publicly traded company on a major US exchange. As such, investors looking to buy cryptocurrencies with an eToro account are in good hands.

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Plus500

Plus500 is a solid broker that lets investors buy stocks, commodities, and cryptocurrencies. While technically classified as a Contract For Difference (CFD) broker, investors aren’t buying assets outright. Instead, they buy a derivative that rises or falls in value in unison with the underlying asset, in this case Bitcoin, Ethereum, or any of the other tradeable cryptocurrencies.

Plus500 is fully licensed in areas where it operates in and is an exceptional choice for investors new to investing in cryptocurrencies.

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What are cryptocurrencies?

Many investors are familiar with at least one or two cryptocurrencies, such as Bitcoin and Ethereum. Given the still young status of the cryptocurrency industry, it is understandable why many don’t fully understand what a cryptocurrency is.

In short, a cryptocurrency is a digital currency that operates without a centralised institution such as a bank to verify the transactions. Instead, a cryptocurrency makes use of a blockchain to create a decentralised record of the movement of coins and tokens.

Bitcoin was the first ever cryptocurrency and it was launched in 2008. The identity of the person (or persons) behind the first ever digital coin remains a mystery to this day. But what is known is the mission purpose of Bitcoin which is to disrupt the global finance industry in the wake of the 2008 financial crisis.

What happened to cryptocurrencies on Monday?

The price of most major cryptocurrencies were down on Monday. Many investors and traders are attributing the selloff to notable cryptocurrency supporter and Tesla Inc CEO Elon Musk who may be having a change of heart about the industry.

Tesla holds more than $1 billion worth of Bitcoin on its balance sheet and a confusing tweet from Musk gave some the impression the company has sold its Bitcoin or is planning to sell its Bitcoin. 

But a follow up tweet from Musk confirmed “Tesla will not be selling any Bitcoin” and many investors are taking this as confirmation that Bitcoin will continue playing a role in the corporate world.

Nevertheless, sellers were in control of the action on Monday with Bitcoin down around 10% on the day. Some are attributing the decline to normal profit taking as the price of one Bitcoin this time last year was around $10,000 so many investors are sitting on large unrealized returns.

Here is a brief summary of the price action of other notable cryptocurrencies on Monday:

  • Ethereum (ETH) down 11% at $3,212.
  • Binance Coin (BNB) down 12% at $502.26.
  • Cardano (ADA) up 14% at $1.95.
  • Dogecoin (DOGE) down 8.65% at $0.48.
  • Litecoin (LTC) down 12% at $267.72.
  • EOS (EOS) down 10% at $9.01.

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