Invest in cryptocurrency, wise or not? What should you be wary of? Get all the relevant information to form your own opinion.
Invest in cryptocurrency, is this the right time, what to watch out for?
Have you ever heard of cryptocurrency? It is a virtual currency that has a strong chance of completely revolutionizing the world of finance and the economy of the future. But is now the right time to invest in cryptocurrency?
To answer this question, we will see what conditions and circumstances can favor this type of investment. Next, we’ll take a look at what you need to know to be successful in investing in cryptocurrency.
Investing in cryptocurrency because it is a safe haven in such a crisis, really?
The coronavirus has caused a considerable health and economic crisis. And the price of cryptocurrencies has not been spared, since since the lockdown in early 2020, a massive drop in the price has been observed.
However, cryptocurrency values caught up considerably at the end of the year. The latter have thus survived this global crisis well, and have finally established themselves as a safe haven.
According to some economists, the weak dollar, negative rates and drastic economic uncertainty are contributing to the rise in cryptocurrency prices.
Proof of this is that at the start of this year 2021, Bitcoin set a new record at over $ 40,000. This considerable increase has made it possible to consolidate its position as a leader in cryptocurrencies, particularly in terms of market capitalizations.
Remember, however, that the global economic situation has only a partial impact on the price of Bitcoin. Indeed, the latter rather obeys a momentum. Other virtual currencies are dependent on the price of Bitcoin, which is the leader in cryptocurrencies.
It should be noted, however, that this latter trend is less and less present, since we find challengers cryptocurrencies managing to achieve remarkable breakthroughs, independently of Bitcoin. Examples include Litecoin or Tether.
How to invest in cryptocurrency?
Investing in cryptocurrency is risky. Even if you invest in assets like Bitcoin or Ethereum, the risk of losing your stake is still there. You must therefore be prepared for this eventuality.
Before investing in a virtual currency, take the time to learn in detail about how the financial cryptocurrency markets work, the different currencies available on the market, and the related decentralized applications.
Don’t hesitate to join an online community (on Slack or Reddit, for example) so that you can interact with other more experienced investors. This will then be an opportunity for you to learn about the various advantages and disadvantages of investing in cryptocurrency.
For this type of financial investment, specialists generally use two different strategies: that of medium or long-term investment, and that of trading.
The medium and long term strategy:
It is the one that can be qualified as an investment, for the other one will speak of trading.
This strategy consists of buying virtual currencies (Bitcoins or others) and keeping them in a virtual safe. However, it is not recommended to store active cryptos in an account created on a platform. Your virtual currency will be more secure if it is stored on a “hardware wallet”.
The investor will then have to choose when to sell some or all of his assets, of course with the aim of obtaining a profit. To do this, it is recommended to set a goal in advance, such as waiting for an active crypto to reach a certain amount before reselling it for example.
Those used to the functioning of the Stock Exchange will quickly find their bearings with this strategy. The latter involves buying and selling crypto assets on a regular basis in order to profit from them.
But to achieve this goal, the investor must have a perfect knowledge of the financial system and markets. The general principle remains the same as for the Stock Exchange: buy assets when their values are falling, and resell them when their values are rising.
The reasoning and the desired goal are more or less the same, only the speed differs. With trading, the trader can take profits after a minute or more, some after a few days depending on the type of trading chosen, sclaping, day trading, etc. To do this, they will trade on a centralized trading platform or a decentralized trading platform, that is to say without a broker.
Making an investment must be done knowingly. Indeed, the value of these still very recent virtual currencies is very volatile. It can skyrocket or drop critically in a year, in a month, or even in a day. It is therefore important to be aware that the sums wagered may be lost.
However, it is still possible to limit these risks by investing strategically. Whether for a short or long term investment, you will optimize your chances of success by investing your money in cryptocurrencies that are supported by real projects, projects that meet needs and therefore have a utility.
The people who lose money in cryptocurrencies, in the long term, are those who have invested in cryptocurrencies that had no real use, therefore value, except that of creating a ponzi scheme, think carefully when you invest, see if people are investing in a project or just to make money. Because if it’s just to make money, then beware, I would even say, run away.