When Is The Right Time To Invest In Cryptocurrency?
Amidst incredible profits, of course, the question is whether it is too late to invest in cryptocurrencies? Cryptocurrency has no proven track record like equities, so no one can say how quickly these currencies will recover from their downturns. However, some significant cryptocurrencies, such as Bitcoin, have managed to recover from downturns in no time.
There are clear arguments on both sides of the coin as to whether it is time to buy or not. The truth is that no one can guarantee that crypto will rise or fall because it is still a relatively new market that has yet to be defined and regulated.
Many investors are still in chaos, ṁoving away from investing in blockchain because they fear the volatility associated with cryptocurrencies. However, it is essential to know that investing in a company run by someone else is not the same as investing in cryptocurrencies.
The value of a cryptocurrency depends on whether people want to buy it or not. It is based on consumers’ interest in buying cryptocurrency when someone starts buying them, the value of the cryptocurrency increases.
In recent decades, the value of the cryptocurrency has soared above many investors’ expectations. Hailed by fans as market-disrupting liberation and demonized by critics as dangerous and volatile, the creation of Bitcoin and other cryptocurrencies has never disappeared from the headlines. But many people have difficulty understanding the technology that drives cryptocurrencies and what makes them work as an investment.
From Bitcoin and Ethereum to Dogecoin and Tether, there are thousands of different cryptocurrencies that can overwhelm you just as you enter the world of cryptocurrencies.
Ethereum, Tether, and Dogecoin are now among the top 10 cryptocurrencies. Some people invest in them to speculate, while others see crypto as a way to store value or hedge against inflation. Ethereum is popular with program developers as a cryptocurrency and blockchain platform because of its potential applications, known as smart contracts, which are executed when the conditions for NFTs are met.
Read More: A Beginner’s Guide to Cryptocurrency
It can be tempting to invest in crypto as a newcomer, but you should be careful. Investing carries risks, which means you could lose money or win double. The biggest drawback of cryptocurrencies is their extreme volatility. The price of cryptocurrencies can fluctuate, go bust, and other scams can increase in value without giving investors a return.
In May, the total value of cryptocurrencies overshot $2.5 trillion, and a plethora of new investors jumped into the game — with 14% of adult Americans owning cryptocurrencies now. Bitcoin, the first significant cryptocurrency, was launched in 2009 and remained the market leader. Its market capitalization is well above its total value of $910 billion in March.
Cryptocurrency Investments and Exchanges
Cryptocurrencies and digital assets can be exchanged at exchanges such as Coinbase, the largest US cryptocurrency exchange, Gemini, and online brokers such as Robinhood and Sofi Invest.
The market for cryptocurrencies is growing exponentially, making the number of people very rich. Bitcoin was created in 2009, the first significant cryptocurrency of the market capitalization, followed by more than 7,000 others. The technology that underpins cryptocurrencies, blockchain technology, has the potential to change our lives for the better.
Such a return is impossible in the realm of traditional investment. Stories of people making millions from cryptocurrencies may sound tempting but bear in mind that significant losses often occur.
The crypto market is volatile and can lead to both huge losses and huge profits. Investing in cryptocurrencies is much safer when the Bitcoin market price is high, but we can’t guarantee that it will remain the same in the future.
Crypto investments are risky because they represent a new development. Therefore, it is vital to limit your potential losses by determining how much of your entire portfolio can be invested in Bitcoin. Suppose you are investing for long-term goals such as retirement. In that case, it makes more sense to use a traditional asset allocation of stocks and bonds as a large part of your portfolio and keep 5% as a risky investment in cryptocurrencies.
A rule of thumb is to invest not more than 10% of your portfolio in individual stocks and less in risky investments. If you decide to invest in Bitcoin, make sure you store some Bitcoin and keep an eye on the price. You can use an investment tracker such as Personal Capital to track price movements and compare them with your other investments.
There are a few different ways to buy bitcoin and other cryptocurrencies, including exchanges and traditional brokers. With cryptocurrency exchanges like Coinbase, a few conventional brokers, and Robinhood, you can start investing in Bitcoin. Choosing traditional brokers gives customers a way to buy and sell bitcoin. Some, like Robinhood, were the first mainstream investment brokers to offer bitcoin (Robinhood Crypto is available in most but not all US states).
Other brokers have announced plans to offer trading in cryptocurrencies shortly. Tradestation offers crypto trading, including Bitcoin, and eToro has a unique social trading platform that allows users to compete with popular traders and move with them.
In addition to the host platform of choice, Gemini users have access to a fully insured hot wallet to store tokens without worrying about digital asset theft. Coinbase is one of the largest cryptocurrency trading platforms on the Internet; it offers security against theft, hacking, and corruption and does not charge commissions or convenience fees.
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So before making any investments into the crypto space, try evaluating the technicalities and their advantages. A few digital assets tend to develop quickly and not all of them end up being successful. Here are a few ways how you can evaluate the cryptocurrency to make any investments into it.
- Go through the whitepapers — read the specifics of cryptocurrency.
- Watch on the trend, analyze the upward & downward trends in the market. Remember, cryptocurrencies are highly volatile.
- Know the company, the team, and thoroughly understand their main objective, and vision
- Read the Tokenomics document, adoption strategies, and the crypto growth
- Understand its acceptability, transparency, and traceability
The information in the article is for informational purposes only and is not intended for commercial purposes or as advice to others, nor should it be used for any purpose.