Over the past years, cryptocurrencies have gained popularity as an alternative asset class with unparalleled capital gain potential.
And if “crypto” is today such a widespread buzzword, it is also due to the growing number of millionaires who have been richly rewarded for their early investments in Bitcoin and Ethereum. But while crypto might have been a great investment early on, the recent crash has caused many investors to think twice about investing their life savings.
So, is crypto still a good investment? Let’s look into it.
The past months have represented the hardest tests for cryptocurrencies, which have been taking the world by storm since the beginning of the Covid-19 pandemic. And, in late August 2022, most cryptocurrencies dipped in value, sinking the global crypto market cap to below the $1-trillion-mark and driving the price of Bitcoin down to $18,830.
Undoubtedly, this bear market has been putting off millions of investors, who are now looking at other investments to safeguard their portfolios. But could this be the best time to buy?
Buying the dip can certainly be a winning investment strategy – even more so in the case of crypto – but it isn’t the best one for everyone!
Generally, investing in crypto is still worth it for those investors with high-risk tolerance.
Well-established cryptocurrencies such as Bitcoin, Ethereum, and Ripple might also be a suitable investment for those investors looking to diversify their portfolio with an alternative asset that has a low level of correlation with investments such as the stock market or real estate.
Ultimately, buying during a dip can lead to significant returns, but cryptocurrencies are known for their high volatility. In turn, investing in crypto is only worthwhile if you only invest amounts you are comfortable losing.
While the recent cryptocurrency crash has undermined the confidence of investors, crypto isn’t likely to go anywhere. Indeed, today, there are credit cards offering crypto rewards, crypto-based casinos, and participating ATMs that allow crypto owners to exchange their digital currencies for cash.
What’s more, retail investors can now access cryptic exchanges via their smartphones and choose among several metaverse cryptocurrencies to invest in.
Ultimately, crypto is playing a critical role in making finance more accessible and decentralized, and it is certainly becoming a part of our everyday life. Nonetheless, the future is still uncertain, and pitfalls may well be around the corner!
If once you have researched the world of cryptos and understood the risks of this highly-volatile asset, you still believe that this is the right investment for you, there are some precautions to take to invest safely.
Here is what you need to know.
The first and most important step to take when purchasing crypto is to research the different investing platforms and select one that is reputable and trustworthy.
If you are unsure how to select a crypto exchange that you can trust, start by checking out the company’s online reviews and learning more about what customer protection policies they have in place.
Once you have selected the right platform for your needs, you’ll need to protect yourself against potential data and identity theft. While most reputable crypto exchanges have cutting-edge cybersecurity systems in place, your device or WiFi connection might be the weak link in the chain.
To keep your personal and financial information safe, use a secured device and consider deploying a VPN.
The last risk you should watch out for involves the inherent volatility of cryptocurrencies.
Unfortunately, there is no investing expert that can foresee exactly when today’s bear market will end – or if it will turn into a permanent trend. What’s more, cryptocurrencies don’t benefit from solid regulations and are not linked to an underlying physical asset.
This is why crypto drops in value as quickly as it rises, and nothing is stopping it from falling to zero within a few hours. In turn, this may cause investors to lose all of their savings in one fell swoop!
Ultimately, if you are looking to invest in crypto, make sure you are only committing money you are comfortable losing!
This is a paid guest post.
Players must be 21 years of age or older or reach the minimum age for gambling in their respective state and located in jurisdictions where online gambling is legal. Please play responsibly. Bet with your head, not over it. If you or someone you know has a gambling problem, and wants help, call or visit: (a) the Council on Compulsive Gambling of New Jersey at 1-800-Gambler or www.800gambler.org; or (b) Gamblers Anonymous at 855-2-CALL-GA or www.gamblersanonymous.org.
