This Is Elon Musk's Single Best Piece of Crypto Advice

You should read this before investing in cryptocurrency.

Elon Musk is a billionaire entrepreneur and the CEO of Tesla. He's also a major advocate of cryptocurrencies and has indicated in the past that he's invested money in three particular coins: Bitcoin, Dogecoin, and Ethereum.

Musk has made clear he's a long-term crypto investor and that he believes virtual currencies -- especially Bitcoin -- have strong potential.

But, while Musk has spoken about investing in digital currencies quite often, there's one single piece of advice he's given that stands out as especially important. And it's advice everyone thinking about buying virtual coins should listen to.

Here's Musk's best advice for would-be crypto investors.

If you're thinking about investing in cryptocurrencies, you need to read this

On Oct. 24, 2021, Musk responded to a question on Twitter about how much Shiba Inu he owned. Shiba Inu is a meme-based cryptocurrency that was developed to compete with the more-established Dogecoin -- another crypto that started as a joke but took on a life of its own and now has millions of investors.

Musk said he owned no Shiba Inu and he listed the cryptocurrency holdings he does have. But he also went on to provide crucial advice in his tweet for anyone who is thinking about buying into this asset class. Musk tweeted, "As I've said before, don't bet the farm on crypto!"

He went on to explain that he believes companies that build products and provide services have more potential for growth and are more stable investments than "money in any form." This theory is why he's urged his followers not to over-invest in any type of virtual coin, even though he's personally put some of his own money, and some of Tesla's money, at stake in the crypto market.

Why you should heed Musk's crypto advice

Musk's warning not to "bet the farm" on crypto is vitally important because it serves as a reminder not to put too much cash on the line when buying a speculative investment that poses a great risk of loss.

Unlike companies that provide clear value to people by providing them with products or services, the value of most cryptocurrencies is mostly theoretical right now. No coins have achieved widespread mainstream acceptance and people can't actually spend virtual currencies with most merchants. The coins have value because people have decided they do, and sometimes there's little underlying rationality for why a particular coin's price goes up rapidly.

Betting the farm, or putting too much money at risk, could expose investors to a significant chance of losing more money than they can afford. Instead of over-investing in volatile assets like cryptocurrency, investors would be better served putting some or even most of their money into companies with proven track records.

This isn't to say that crypto investments are a bad idea. But Musk's statement indicates that he'd be in agreement with other financial experts, including Dave Ramsey and Suze Orman, who have each indicated you should only invest money in cryptocurrencies you can afford to lose.

This is advice every investor should listen carefully to when deciding what role cryptocurrency should play in their portfolio.