Is it Really Worth It to Invest in Cryptocurrency Right Now?
The cryptocurrency market is renowned for its high volatility, which may make or break you depending on the situation. Cryptocurrency investments have the potential to make you incredibly wealthy, but they also carry the risk of causing you to lose all of your life’s savings. Despite the risks involved, investing in crypto assets can be a wise decision if done correctly, carefully analyzed, and included in a diverse portfolio.
It’s important to note that people frequently consider the drawbacks of cryptocurrency investing and wonder whether it is really worthwhile to do so, especially when there is a bearish trend and earlier adopters are losing money at that moment.
No matter how bad the market turns out to be, we are still below the all-time high that the cryptocurrency market as a whole reached about a year ago. This shows the potential level of Bitcoin and its rivals, at the very least.
Should you invest in cryptocurrency?
How long you can withstand a market trend going against you and how well you can control your emotions will determine whether or not you should invest in a particular asset, particularly in the highly speculative and volatile world of cryptocurrencies.
However, while it’s no longer a secret that cryptocurrency investments come with significant risk and it’s definitely not a good idea to invest all of your savings in the asset class, this is an investment you can give a try and watch as it fluctuates in your wallet and ultimately earns you big in the long haul.
Moreover, the history of the cryptocurrency market is actually rather predictable over longer time periods. Bitcoin and Ethereum have experienced relatively consistent trading cycles, recovering from each significant crash to reach new all-time highs eventually.
Fortunately, the cryptocurrency market is now rebounding from its most recent collapse, which was first brought on by the failure of the Terra Luna coin and UST stablecoin in May 2022 and then nearly ruined by the abrupt shutdown of the FTX crypto exchange in November 2022. The market has recovered by about 40% this year alone.
Many cryptocurrencies, including Bitcoin, Ethereum, BNB, and XRP, start out with grand ambitions that might eventually come true. Even though the success of any cryptocurrency project cannot be guaranteed, early investors in a project that achieves its objectives could make substantial long-term rewards.
In essence, if you want to invest in a project, start early, only invest what you can afford to lose, avoid falling prey to FOMO, and always conduct thorough research. Cryptocurrency investment is sweet if the necessary factors are taken into account.
What are the risks involved in crypto investment?
Cryptocurrency wallets, like traditional bank accounts where we keep our money, are vulnerable to exploitation in a variety of ways, depending on the type of wallet used and how cautious the user is.
Custodial wallets and cryptocurrency exchanges, for instance, are susceptible to hacking and can become the focus of other criminal activity. Investors who had their digital currencies stolen as a result of security breaches suffered significant losses, which prompted many exchanges and third-party insurers to start providing protection against hacks.
Apart from hacking or exploitation, since crypto exchanges are controlled by humans, they can occasionally make mistakes or be fraudulent. Following that, they would always flee and file for bankruptcy, turning the investors and users into unsecured creditors. This indicates that users are likely to receive nothing at the end of the bankruptcy process.
However, it is safer to keep your cryptocurrency assets in personal, non-custodial cold wallets. This makes it possible for you to trade directly on decentralized exchanges that aren’t governed by any outside custodian. If you feel like trading on a centralized exchange like Binance or Crypto.com, you can transfer some coins there and place your trades safely, just without keeping your life savings there. But always remember that cold wallets are much more complicated to use and maintain.
The future of cryptocurrency
Although you may have already discovered a number of factors — including those covered above—that clearly show that cryptocurrency is not a secure investment, other indications are continuously surfacing that suggest cryptocurrency is here to stay and will unquestionably become the future of finance.
Today, a lot of big businesses are using technology, especially blockchain technology and other crypto-related phenomena like NFTs, Web3, and the metaverse. For instance, Facebook’s parent company, Meta, has been one of the main proponents of the metaverse ever since it realized how productive virtual and augmented realities could be in the workplace. Since then, a number of other significant businesses, including Twitter, Microsoft, and Google, have adopted a similar strategy.
Moreover, it is important to note that a growing number of nations now accept cryptocurrencies, particularly the king of them all, Bitcoin (BTC), as legal tender. El Salvador was the first nation to accept it as legal tender in 2021.
However, it probably makes sense for you to directly purchase some cryptocurrencies as part of a diversified portfolio if you think that cryptocurrency use will become more and more common over time.
You ought to be able to manage the investment risk as a component of your overall portfolio if you conduct adequate research and learn as much as you can about how to invest in cryptocurrencies.
Closing thoughts
The potential impact of bitcoin on the US dollar and other traditional currencies is simply too great to ignore at this point. Bitcoin might be a great investment if this disruption is successful. The same holds true for general cryptocurrency assets, but you must always exercise extreme caution and make informed investment choices.
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