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Digital currency investment – should you or should you not?

From being dubbed as somewhat of an outcast to rising up as one of the most coveted investment and trading vehicles- and that too in just over a decade- crypto has treaded a long way. While on one hand we see renewed interest in crypto investment, on another, a mass of naysayers are still sceptical about crypto. It’s self-explanatory why new aspiring investors and traders are always in a dilemma when it comes to putting their hard-earned money in crypto. Well, cryptocurrency investment could be both profitable and risky, depending on how you delve into it.

It won’t be fair to make a blunt statement that crypto is a bad investment choice. On the other hand, even the most passionate crypto aficionados won’t tell you that crypto is a safe investment. Put simply, crypto is more “double-edged” sword. However, if you read right, the sword (read odds) might be in your favor.

The post below offers a brief on both the good parts and risks associated with crypto, followed by a pointer on safe crypto investment.

Good things about crypto

Here is a list of advantages of putting money on crypto-

Exponential returns

Crypto market is extremely volatile and that’s one of the best aspects about it. Extreme volatility leads to wild swings in the market, leading to dramatically high returns at times. In fact, a key reason why several investors are choosing crypto over traditional investment vehicles is the potential of way higher returns than conventional vehicles. Cryptos can rise up to 60-70% within a week- you can’t expect such astronomical scale of surge with traditional investment vehicles.

Start with small amount

You don’t always need to invest a lump sum money for crypto investment. If you want to start small, even a debut with $50 would do.

Investors who had invested $100-$1000 in the early days of BTC are millionaires now. If you are consistent with your investment, are willing to wait for a few years, and don’t indulge in impulsive trading, you could experience large returns with crypto.

Rising market value

The crypto industry as a whole is poised to rise up by 5x by the coming 8-9 years. And that’s a huge lift for a new asset industry like crypto. Crypto usage is increasing- even national governments in several countries are in favor of crypto activities now. Moreover, crypto is the only currency for taking part in futuristic technologies like Metaverse and NFT. Thus, if you put your money (in crypto) now, you might be able to attain excellent returns after a few years.

Risks about crypto

Lack of stability

Once again, the crypto market is wildly volatile and that’s one of the riskiest aspects about it. If crypto prices can swing to exponential heights, they can also plummet down to jaw-dropping lows in a few days. Crypto industry is largely influenced and affected by speculation and media activities – one single criticism about a crypto and it can lead to immediate decline in its prices. Bottom line is, the crypto market is unstable and might affect your investment goals if you put too much money into it.

Scam and theft

Almost all the leading crypto exchanges have been attacked by hackers. Investors have lost billions in the latest crypto crash. In fact, the recent may-June 2022 was triggered by a terrible financial attack on Terra Luna, leading to a colossal collapse by 98%. Crypto crimes reached their All-Time-High last year in 2021. Now, that’s scary no doubt!

Most centralized exchanges don’t allow users to store crypto holdings in 3rd party wallets. Now, what if the exchange gets hacked? Worse, centralized exchanges are immensely vulnerable to hacking attacks.

Not all cryptos assure sustainable growth

Although the crypto market has been evolving at a rapid scale yet not all cryptos can promise you sustainable growth. For example, Litecoin was around $3.38 in 2013. In 2021 April, the price soared to a solid $245. Cut to 2022 October, Litecoin is down to a jaw-dropping $52! Litecoin is not the only coin to suffer this downfall.

Tips for investing safely in crypto

Based on the discussion above, it can be claimed that crypto investment is certainly worth a shot. But, one has to be careful. The tips below will help you to steer clear of mistakes witnessed with crypto investment and follow safe investment habits.

Go for long-term

If you are looking for higher returns, it’s better to opt for long-term HODLing. Patience is a big word when it comes to profitable and safe crypto investment. One of the best aspects of long-term investment in crypto is that HODLing is barely affected by frequent price changes.

DCA strategy

In DCA, you will deposit a certain fixed amount of money in crypto every month. The amount of money will be fixed. Now, there are multiple advantages of the DCA strategy. One, it helps to create a fixed investment routine. Since it is fixed, there is no risk of unmindfully skipping out on investment. Also, when the amount is fixed, you cannot shell out extra money that eliminates impulsive investment risks. Another benefit is that since the crypto market fluctuates frequently, if the market soars up suddenly, you will receive more volume of cryptos with the same sum of money than what you usually receive.

Also Read: https://multibankfx.com/products/digital-assets

Choose coins wisely

Both the points mentioned above would reduce to nothingness if you are not selective about coins. If you are opting for investment, especially long-term investment, be selective about choosing the right crypto. Not all cryptos could bring you large profits over the long term. Forget profit, some of these might not even exist in the market after a certain point of time. Focus on cryptos that come with solid and realistic use-case and a potential roadmap.

Low price should not be ultimate pull

Bitcoin reached around $69,000 in 2021 and is currently trading at below $20,000. It’s one of the best times to buy BTC. You can trust BTC because the coin has actually proved its mettle and that too multiple times. But, every crypto out there is not a blue-chip coin like BTC. Some cryptos experience dips due to decline in user demand and market value. So, don’t just focus on low prices you must also look at other factors before investing.

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Melissa Edwards
Melissa Edwards
Hi, I'm Melissa Edwards a former writer and coach at JKPowerball, a certified school counselor, and a former educator. I have written more than a dozen articles for Triple Gems. Throughout my career, I have worked with youth and families in private homes, residential group homes, and schools.

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