Cryptocurrency is one of the most exciting sorts of investments, and you’re not alone if you’re undecided about buying. Despite the fact that only 14% of adults in the United States hold cryptocurrency, a 2021 survey from crypto exchange Gemini found that 63 percent of Americans consider themselves “crypto curious.”
While many cryptocurrencies had a price drop earlier this year, they are now gaining traction. For example, Bitcoin (CRYPTO:BTC) is edging closer to $50,000 per token, its highest price since May.
Is it time to invest now that crypto prices have recovered? Here’s everything you need to know about it.
Is cryptocurrency a safe investment?
Cryptocurrency is classified as a “high risk, high reward” investment. Because it’s still highly speculative at this time, it’s riskier than investing in equities.
Stocks have a lengthy history of increasing in value over time, but cryptocurrency is still in its infancy. While it has the potential to become mainstream and have real-world applications, no one knows for sure.
This isn’t to say that cryptocurrency is a bad investment or that you shouldn’t invest in it. If it becomes useful in the real world, it has the potential to reshape the world — and those who invested early on could profit handsomely. However, before you buy, you should think about your risk tolerance.
If you’re a risk-averse investor concerned about losing money, bitcoin may not be the ideal option for you. There’s a chance it won’t work out in the long run, and if that happens, you’ll lose all you put into it.
Similarly, the volatility of bitcoin is well-known. In the past, Bitcoin has lost about 80% of its value in a year, and Ethereum has lost nearly 95% of its value in a year. Crypto may not be for you if you know you’d lose sleep if your investments fell.
On the other hand, if you’re ready to take on some risk in exchange for the chance to make a lot of money, you might be a good fit for this kind of investment. However, if you do decide to purchase, there are a few things to keep in mind first.
How to Invest with Confidence?
If you do decide to invest in cryptocurrencies, you should do it with caution. To begin, just invest money that you can afford to lose. When it comes to investing, there are no certainties, but because crypto is riskier than the ordinary stock, it’s extremely vital to invest only what you can afford.
Also, make sure you have an emergency fund with at least three to six months’ worth of savings. Because cryptocurrency is so unpredictable, there’s a danger that after you invest, values will fall again. If you need to cash out your assets due to an unexpected expense, the last thing you want to do is sell your bitcoin at a low price. You can keep your money invested until prices rebound if you have a good savings account.
Finally, when picking which cryptocurrency to purchase, do your homework. Some are riskier than others, and not all of them are made equal. You can find my analysis on which cryptocurrency is best to invest in the following article.
Which cryptocurrency is the best to invest in right now?
The most well-known cryptocurrency names are Bitcoin and Ethereum, but there are a slew of others.
The best investments are those that will continue to increase over time, so make sure you’re looking for cryptocurrencies that will help you “become rich quick” rather than cryptocurrencies that will help you “get rich quick.”
Although cryptocurrency is dangerous, it is not a poor investment. Make sure you can afford to invest and are comfortable with risk and volatility before you buy. Cryptocurrency isn’t for everyone, but it could be a good investment for you.
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Should You Put Your Money In Cryptocurrency in 2021? was originally published in DataDrivenInvestor on Medium, where people are continuing the conversation by highlighting and responding to this story.