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Bitcoin advocate Charlie Shrem: Here's how long you should hold your crypto

·Chief Tech Correspondent
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Cryptocurrency may be notoriously unpredictable, but don’t let the price volatility deter you from investing, advises Crypto.IQ Chief Visionary Officer Charlie Shrem.

“Pick something in the top 10 or 20, and look at those, learn about them, and take a stake in them,” Shrem told Yahoo Finance at the MoneyShow conference in San Francisco on Thursday. “Any crypto you’re going to buy, hold for five years. Say, ‘I’m going to lock this, and this money is locked for five years. There’s a high probability you’ll come out ahead in five years, because usually, these bull and bear markets go in two-year cycles.”

If anyone knows cryptocurrency through and through, it’s Shrem. In 2011, the 28-year-old serial entrepreneur co-founded BitInstant, a bitcoin exchange that, at one time, processed 30% of all bitcoin. Then in 2014, Shrem was arrested and convicted of operating an unlicensed money-transmitting business. (Shrem knowingly sold bitcoin to a BitInstant user who, in turn, resold bitcoin to others who purchased drugs off Silk Road.)

Crypto.IQ co-founder and Chief Visionary Officer Charlie Shrem. Source: Business Wire / <a href="https://www.businesswire.com/news/home/20180510005572/en/" rel="nofollow noopener" target="_blank" data-ylk="slk:Multimedia Gallery URL" class="link ">Multimedia Gallery URL</a>
Crypto.IQ co-founder and Chief Visionary Officer Charlie Shrem. Source: Business Wire / Multimedia Gallery URL

After serving time in a Pennsylvania prison for over a year — an experience the bitcoin millionaire describes as humbling — he eventually co-founded Crypto.IQ, which offers crypto-focused investment resources, including research and coin reports, direct access to traders and text alerts regarding digital currency prices.

The cryptocurrency markets have drastically changed in the years since Shrem co-founded BitInstant. Now there are over 1,600 digital currencies, from the well-known — bitcoin (BTC), Ethereum (ETH), Ripple (XRP) — to the more niche, such as the marijuana-focused Potcoin and Dogecoin.

“These 1600 coins are doing the guerrilla marketing,” Shrem explains. “They’re doing that on-the-pavement work that crypto used to do in the early days. It’s getting people in — it’s getting people intrigued.”

Investing in moderation

Shrem advises most cryptocurrency traders to invest smaller amounts and avoid the hard lessons learned from some investors who poured the majority of their money into crypto when digital currency prices skyrocketed last winter, only to come plummeting back down.

“You’re putting your wealth in these things, and they break,” Shrem acknowledges. “Things happen. The values go down 90%, then the values go up 100%. I always tell people if they want to get into crypto, ‘How much money, if you lost it right now, would you be OK with?’ ‘$500,’ they tell me. So invest $500 in a basket of crypto, and then just have fun with it. Just enjoy it, learn. There’s a lot of good ones: bitcoin, Ethereum, Dash, Litecoin. Just learn what makes them different.”

Despite his own ups and downs, Shrem remains bullish on mainstream acceptance of crypto. The SEC, which has resisted embracing cryptocurrency over the last year, denied a round of proposals for a bitcoin ETF last Wednesday on concerns that prices would be vulnerable to manipulation. But Shrem predicts the SEC could finally approve an ETF sometime next year, which would go a long way towards more mainstream adoption and acceptance of digital currencies.

“I want it,” Shrem concedes. “I also want it to be where people don’t get screwed. We only have a ‘first shot’ at it. If we have an ETF, something happens, we get screwed. They shut it down. You know hard it’s going to be to have an ETF again? An ETF will happen. I would almost put it certainly in 2019.”

Spoken like a true crypto evangelist.

JP Mangalindan is the Chief Tech Correspondent for Yahoo Finance covering the intersection of tech and business. Email story tips and musings to jpm@oath.com. Follow him on Twitter or Facebook.

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