Everyone is talking about Bitcoin. A 30% dip in one day is termed a crash in the stock market, but it is normal in the crypto market. This is because the stock market is regulated while the crypto market is not. Hence, regulation is important for the crypto market to safeguard the investors and control the power feud.
Crypto: Invest with caution
For instance, Elon Musk has become the Doge “father” since his tweets sent Dogecoin up 800% in 50 days. Those types of gains can make you a millionaire by day and penniless by night. Because when such coins fall, it is not easy to sell. There are no buyers in the market. Moreover, the crypto exchanges are not user friendly to execute your trade as easily as the stock exchange.
Moreover, new cryptos keep coming up. Recently I talked about how absurd was the development of Dogecoin in 2013. This year, some developers have come up with a Shiba Inu coin, which they refer to as a “Dogecoin killer.” The token is built on the technology on which Ethereum was built. If you think it’s absurd, then wait till you read the story.
Shiba Inu creators gave 50% of all SHIB (more than 410 trillion tokens) to Ethereum co-founder Vitalik Buterin. Buterin just burned 90% of his SHIB holdings worth US$6.7 billion by sending them to a dead blockchain address, thereby removing them from circulation. He wanted to avoid his SHIB transactions to create any herd mentality. I guess only Musk can handle all that power and not feel remorse when his one tweet sends BTC and Doge down 10-20%.
For crypto, I always advise that you invest only the amount you are willing to lose as Musk won’t refund your losses. His fortune is safely invested in Tesla. If you want to mimic Musk, mimic him completely. Half knowledge is more dangerous than ignorance.
Two stocks to buy in May
Tesla invested around 7% of its cash reserve in BTC. You can invest less than 3% of your free cash in BTC and balance the risk with two growth stocks in your Tax-Free Savings Account (TFSA). Like Musk, even you can invest in an electric vehicle (EV) stock like Magna International (TSX:MG)(NYSE:MGA).
Magna is making new strides in the electrification of vehicles. It is no automaker, but it supplies components like e-Power terrain to EV makers. It is also offering its auto engineering services to help tech companies build EVs. At present, the crypto-mania has created a supply shortage of semiconductors as crypto mining companies and crypto miners are gobbling up the exiting stock of computing units to mine their way to a million dollars.
The latest expectation is that the chip shortage might ease in 2022. Once this supply issue is resolved, EV production will begin in full swing as major automotive markets are emphasizing the adoption of EVs to reduce carbon emission.
Magna will benefit from the upcoming EV wave, and so will BlackBerry (TSX:BB)(NYSE:BB). While BlackBerry is an endpoint cybersecurity firm, it has also ventured into the embedded platform that caters to automotive. Its QNX platform powers 175 million vehicles and has secured design wins from 23 of the top 25 EV makers. Sadly, Tesla is one of the two top EV makers that is missing from BlackBerry’s clientele.
BlackBerry is penetrating deeper into the automotive market. Its upcoming IVY platform marks its entry into the vehicle data market. BlackBerry CEO John Chen said that the company is receiving interest from many clients for the IVY platform. This platform will collect data from your car, convert it into analytics and intelligence, and provide it securely to third parties like repair shops and insurance companies.
If the crypto bubble bursts, the EV wave will surge, and your crypto losses will be more or less offset by EV gains. Make your EV bet before May ends, as crypto is showing steeper dips than rallies.