Cryptocurrency is getting more popular by the day and has seen many people choosing it as a form of investment.
There is no doubt about it, investing in crypto assets is not without risk. In fact, it is a high-risk gamble which could pay off or make you lose all your money.
Bitcoin, the number one cryptocurrency made many an overnight millionaire as it makes its debut in 2009. The price of Bitcoin hasn’t been stable since then (there have been high and low times).
In early 2022, Bitcoin suffered a dip which made some investors/traders bite their fingers. Many have also asked if it is still safe to invest in crypto assets.
It is therefore important to study the market before deciding whether to invest in a crypto asset or not.
What You Need To Understand Before Investing in Cryptocurrency
1. It is important before investing in Bitcoin or other crypto asset that you go in with your eyes open.
2. Crypto is not without hype, if you’re investing, do it based on the facts and not the hype.
3. Always have it at the back of your mind crypto’s volatility makes it very risky. Before you buy and sell crypto assets, know the risks so you can judge if investing in it is a good idea or not.
4. Understand how cryptocurrency works by getting more facts about it before dabbling into it.
What are the risks of investing in crypto?
The risk posed with investment in crypto and other factors have made governments and financial regulators in almost every country to frown at digital currencies. Here are some of the risks involved in crypto investment.
One of the characteristics of cryptocurrency is volatility in price. Asides stablecoins like USDT, USDC and others, crypto assets are extremely volatile. It is very risky as you may make high returns or lose everything you invest on a crypto asset.
Many have used the hype associated with crypto coins to scam people. Scammers lure people by promising them ten times or more the return on their investment on a project which vanishes into thin air later. One of the most common types is when a criminal hacks into your computer and freezes you out of your account.
3. Fake promises of high returns
Crypto firms may also be overstating how much investors could receive in crypto, while minimizing the risks. This is another risk which makes crypto the most risky form of investment.
4. No compensation scheme
Unlike banks or other financial systems where you can be covered by protective schemes, crypto has no compensation scheme. If a cryptocurrency exchange/platform goes bust, there is no guarantee you will get your money back. If you lose your password, again, there is no one to go to get it back.
Is crypto a good way to make money?
Many people have turned to crypto as a way of making profit. Crypto trading is becoming more popular in African nations which can be seen in the number of African users on crypto exchanges. The issues with financial systems, unemployment, poverty among other factors make crypto deals an option for the people.
Many have made a fortune in crypto (especially the early investors) while several others are still making money daily while trading/investing in crypto coins.
Bitcoin’s price soared through 2021, reaching record highs of just under 44, 000 pounds in November, but dropped to 27, 000 pounds at it’s lowest in 2022. This is to show that crypto’s volatility can make your investment go either way.
New cryptocurrencies, most using blockchain technology are also on the rise. Some are intended to replace traditional currencies such as pounds or dollars. Others are used to create new types of financial application, or swap value between various digital currencies.
If you are considering buying/investing into digital assets, look closely at projects individually to see how they might pan out in the future.
Is crypto a good investment in 2022?
Cryptocurrency saw a dip with Bitcoin in January 2022 which got many who have invested a lot to consider trying another form of investment. There is actually no guarantee a cryptocurrency will remain in action for the long run.
Although the dip is not a new thing in the crypto space, Bitcoin has witnessed a dip at some points in its existence till date and people are still making profit. Investors just need to make their research on these assets which may include small cap altcoins for them to make profit.
It is not advisable to stick with small cap altcoins or unknown coins for long-term basis as the future is not guaranteed. Coins such as Devcoin, novacoin, and CHNcoin are no longer listed by CoinMarketCap which might have been a disaster for its investors.
Bitcoin, Ethereum, Binance Coin, USDT and a host of other coins are top on investor’s portfolio in 2022. It is important to be updated about the trends in the market. The crypto exchange or trading platforms to be used is also to be considered.
Cryptocurrency is still a good form of investment today even with the early 2022 Bitcoin dip. Some crypto assets are reaching new heights while some small cap altcoins are making their way into some investors portfolio.
Bitcoin, Ethereum, USDT are still top of most serious investors list. The veterans/experts will not consider putting their money into projects that are not already well known.
No matter the status of the crypto assets you’d be considering to invest in, putting 1% of your earning is a good way to diversify your portfolio.
Also Read– Football & Crypto- What You Need To Know
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