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Crypto, its volatility and when it’s a good time to invest in it have long been topics of debate. Has COVID-19 strengthened or swayed people’s views?
Over the past decade or so, cryptocurrency has gained legitimacy and become a popular asset among investors for various reasons, including the potential for higher returns and its unique structure. However, many people remain reluctant to get involved in the unregulated world of cryptocurrency, especially in economically challenging times.
We are living in uncertain times where people worldwide are expecting a global recession as a result of the COVID-19 pandemic. Investment options are perhaps not the first thing people think of when trying to be frugal, but surprisingly there are certain things worth investing in.
Cryptocurrency is one of them. According to recent figures, many are taking the plunge and investing in Bitcoin. Apart from their lucrative potential, BTC and Altcoins offer many other benefits, namely fast, easy and secure payment methods. These are but a few reasons many online casinos are offering digital currency as an alternate method of payment. What’s more, some even offer it as the only method of payment because of its desirable features and usability.
At the end of the day, one of the most prominent challenges investors face when considering crypto as an asset is not getting carried away by all the hype. Despite the fact that digital currencies have become prominent in the portfolios of many big investors, and there has even been a significant degree of institutional adoption, experts continue to encourage investors to exercise caution due to the volatility associated with crypto.
If you are pondering the prospect of investing in the crypto market, it is essential to do adequate research before parting with your hard-earned cash. To make life a little easier, we’ve come up with a list of the top things investors need to know about investing in digital currencies during a global pandemic:
Build Your Crypto Knowledge To Get A Feel For The Industry
If you are new to the world of cryptocurrency, you’ll need to build your understanding of how everything works before you start investing. Most people have probably heard about Bitcoin and Etherium, but making an effort to learn about the small digital currencies and tokens available could make a huge difference when it comes to profiting from your investments.
Understanding the blockchain technology that forms the foundation of this world will also be useful to any potential investor. Once you’ve identified which cryptocurrencies you want to invest in, find out how the tokens make use of blockchain and try to ascertain whether there are any innovations that set your chosen assets apart from the rest of the field.
While you’ll find plenty of literature about digital currency, the best advice and insights will probably come from fellow investors. This is why it is useful to plug into the highly active community of crypto enthusiasts. Using social media channels, especially Twitter or Reddit will help you connect with the right people and learn about trends in the crypto world.
Don’t Forget About The Importance of Timing
Once you’ve done your research and got a feel for the industry in order to establish where you’d like to invest, it is time to get stuck in. Well, jumping head first isn’t always wise. If you want to be successful in the crypto world, you’ll need to time your investment wisely.
Because everything in the world of digital currencies moves fast, the markets are known for being highly volatile. Most people will tell you to invest in a new currency that is set to explode in popularity. However, try to ignore the hype and instead monitor the industry before making your investment.
Studying past trends in cryptocurrencies will give you an idea of price patterns and help you make an informed choice about when to invest. Once you’ve been involved in the area for a while, you’ll see how price manipulations or news of some exchange hack can send shockwaves amongst investors. Remember to study the field more broadly to avoid making emotionally-driven moves.
Finally, be cautious about your investments, especially when things are tight during a global pandemic, and never invest more than you can truly afford to lose. Digital currencies are incredibly speculative. We’ve all read stories about people becoming bitcoin millionaires overnight. But for each of these successful stores, there will be many others who’ve invested in a virtual token only to see their money disappear.
Prepare Yourself For Volatility
We’ve already mentioned that cryptocurrencies are known for being notoriously volatile. However, it is impossible to reiterate how important it is for potential investors to be mindful of this.
If you are going to be successful in the crypto arena, you’ll need to keep a cool head and keep your emotions out of it. The best investors are those that get involved to play a steady long game rather than those that want to make easy cash.
If you are in it for the long term, you won’t need to get yourself stressed out about short-term swings. Often the best approach for those that aren’t experienced day traders would be to ‘set and forget.
Simply taking a look at bitcoin’s price history will show huge price corrections and volatility. If you aren’t disciplined and make impulsive financial decisions, this will only serve to prevent you reaching your long term financial goals and cause a lot of stress in the interim.
Erring on the side of caution by investing no more than 5% of your total portfolio, especially at the early stages of your investment journey and during this post-pandemic period, is also wise.
In short, the world of cryptocurrencies is an exciting place to be right now and provides the potential for lucrative financial gains. However, it is also a highly volatile market with limited regulation to protect investors. It is therefore hugely important that investors spend time getting to know the industry and how it works before taking the plunge.
