Over the past years, cryptocurrency seemed to be a golden ticket to long-term wealth. But the events of the past months, alongside the fact that most cryptos are in the middle of a bear market, have made investors reconsider their choice.
So, should your portfolio include crypto in 2022? While cryptocurrencies aren’t the best choice for all investors, new insights suggest that this might be a great time to welcome crypto among your assets. Here is what you need to know before investing.
3 Considerations To Make Before Investing in Crypto
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Investing in cryptocurrency can lead to significant capital gains – but the journey isn’t free of risks! And, the market liquidity crisis that started early in 2022 confirmed that cryptocurrencies are not immune to macroeconomic trends.
So, is investing in crypto a good idea? With the right considerations and cautions, it certainly is!
Choose a Reputable Investment Platform
The first step to investing in crypto is to find a reliable investment platform. While online trading scams are becoming less common, choosing a platform that isn’t trustworthy or reputable can endanger your assets in more than one way.
For example, a trading app without the right security measures in place can expose your financial and personal details to hackers, which can cause significant losses.
To avoid these pitfalls, choose a platform that has been around for a long time and provides users with advanced protection policies. For instance, buying crypto on SoFi gives you access to the best cryptocurrencies, unparalleled protection measures, and 24/7 assistance.
Only Invest What You Are Comfortable Losing
Compared to other assets, cryptocurrencies come with a higher level of risk. The reasons behind the volatility of Bitcoin and other coins are many and varied, including the fluctuating investor sentiment, the lack of regulatory agencies, and the newness of these currencies.
Because of the inherent risk that cryptocurrencies carry, it is crucial to assess your risk tolerance level and only invest what you are comfortable losing.
Learn As Much as You Can About Crypto
The world of cryptocurrency is developing at an unprecedented rate. Because of this fast-changing market, it can be hard for investors to keep up with market trends and stay up to date with the latest developments.
That is why before investing in crypto, you should hone your knowledge of this asset class and the market as a whole. Using some of the best cryptocurrency books and subscribing to magazines such as CoinDesk can help.
3 Reasons To Have Crypto in Your Portfolio
Once you have a better idea of how to mitigate the risks associated with investing in cryptocurrency, you are ready to start investing. Here are some of the best reasons to invest in crypto in 2022.
After the Dip in 2022, Potential Is at Its Highest
After the events that took place in early 2022, most cryptocurrencies are now riding out a severe bear market. The prices of some main coins have dropped significantly and, in October 2022, the price of Bitcoin remained around the $20,000 mark – a significant drop since the record-high levels of November 2021.
This price drop can give investors a great opportunity to access their preferred coins at a more affordable price. And, don’t forget to remain invested until the next bull market comes around!
Use Cases for Crypto Are Multiplying
One of the reasons behind the volatility of most coins is the difficulty of associating a fair value with them. However, today, digital currencies have begun playing a major role in the world’s finance, and new use cases for major cryptos are found each day.
For example, today, crypto users can withdraw cash from participating ATMs, use crypto to gamble, and even receive credit card rewards in their favorite cryptocurrency. As more uses for crypto are found, the value of digital currencies is increasing.
There Is a Range of Options for Investing in Crypto
One of the main reasons why some investors prefer to stay clear of cryptocurrencies is the high level of risk associated with them. However, today, some strategies can help you mitigate this risk. For example, you can now invest in crypto EFTs and index funds.
If you are unsure about how to minimize the risk involved with crypto, or you are struggling to find a clear investment strategy for your needs, working with a specialized advisor can help.
