Cryptocurrency will go down in history as a game changer. Yet, at first, there was a lot of skepticism surrounding digital currency. Indeed the naysayers are becoming louder, according to a Washington Post report. Some groups are sending out warnings about cryptocurrency investing.
Indeed there is even a moniker that applies to them. You will find references to them as cryptocatastrophists. What is interesting is the types of personalities the groups comprise. There are billionaires, computer scientists, bloggers, and, of course, crisis prophets.
In a letter to congress, the group outlined dangers of cryptocurrency investing. To them, it is an unsuitable condition for large-scale economic activity.
You will run if you look at cryptocurrency investment from the cryptocatastrophist viewpoint. What is important is to approach it from a point of knowledge. And that is the purpose of this article. We will share certain things to know about investing in bitcoin, a form of digital currency.
1. Bitcoin Investing; Is It A Good Idea
Is bitcoin investing a good idea? It would be easy to ask the same question for any investing. The trick is to approach the process from the point of knowledge.
Also, determine your goals for what you hope to achieve.
Before you invest your money, it helps to know if you’ll get ROI. What is the point of putting your money in an area that will not give you back anything?
Determine your risk tolerance and how much you can invest. Think about bitcoin investing as a way to increase your portfolio exposure. Understand that cryptocurrency as a whole experiences price volatility. Indeed if you keep up with bitcoin cash news, you may have seen the fluctuations over the years.
2021 was a good year for investors. The bitcoin cash Kurs dollar in November was as high as $65,000. A look at the prices in 2022, October shows a decrease to about 1$9,000.
A good idea when investing in bitcoin is to diversify your portfolio. That will reduce your risk exposure. You can then sit on the investment until there’s a positive market shift.
2. Familiarize Yourself with Bitcoin Investing
You must educate yourself on everything to do with bitcoin investing. The advantage is that there are so many resources you can use. Keeping up with bitcoin cash news, for example, is one way.
Take time to understand concepts like bitcoin cash price prediction. It will help you decide how much to invest and when. Know the best platforms to buy bitcoin for the safety of your money.
Learn about price fluctuations. As of October 2022, one bitcoin in euro costs €19,581. It could be different if you check the same tomorrow or next week. So, what do such changes mean for your investment?
Have it in mind that intelligent investors always stay in the know. With knowledge comes the power to make better decisions about investments.
3. Have Clarity on the Pros and Cons of Bitcoin Investing
There are some pros and cons to bitcoin investing.
- Higher liquidity with bitcoin investing. It is easier to sell bitcoin assets on many trading platforms. That makes it an ideal option for short-term investing.
- Lower risk of inflation, which we will discuss in more detail.
- Minimal trading, unlike stocks or shares that need more involvement.
- Instantaneous transactions with Bitcoin. You don’t have to wait for days or weeks to settle trading orders like in the case of stocks.
Disadvantages of Bitcoin Investing
- High volatility due to the constant price fluctuations.
- Irreversible transactions can lead to loss of money.
- Absence of a regulatory framework brings in a level of uncertainty. Yet, for some people, it is the best part of cryptocurrency.
- Lack of Consumer Protection, which ties in with the point above.
4. Never Invest More Than You Can Lose
Sage advice on investing is never to put in more than you are willing to lose. Indeed this does not only apply to bitcoin investing. You will hear the same when it comes to stocks, shares, and commodities.
One advantage of bitcoin investing is that it is resistant to inflation. This is due to the tight rein the industry puts on bitcoin mining.
Bitcoin mining refers to the process of releasing bitcoin into the market. The process is complex, and the mining difficulty levels keep changing. Circulating a few bitcoin ensures there is no risk of oversupply. It also helps keep the bitcoin price remains high.
But, as we have stated above, the bitcoin market is very volatile. Even with the best bitcoin cash price prediction, don’t put all your existing wealth in one basket. A good idea is to start small. If you make a profit, you can always sink some of it back into your bitcoin investment.
5. Decide On the Best Bitcoin Investment Vehicle
There are different ways to get into bitcoin investing.
- The first is to put your money in companies that use bitcoin technology. For instance, exchange-traded funds (ETFs) give direct access to such.
- Get into bitcoin mining.
- Buy standalone bitcoin, which you transfer to your wallet. When the time is right, you trade them in. Also, understand the limitations on trading platforms on the purchase of standalone bitcoin. Some of them do not allow investors to hold bitcoin.
Once you decide on the investment vehicle, determine the length of the investment. The buy-and-hold is a long-term investment strategy. It is ideal for those who see the potential of bitcoin investing.
Other people will get into long-term investing. But once they see the possibility of good returns, they will sell.
The other option is to get into short-term volatility investing. A look at the bitcoin cash price prediction can give you some idea of how the market will perform. You can then sell when the price is high and buy when it is low.
Bitcoin investing has the potential to give you good returns. But do not walk into it from the point of ignorance. It helps to understand things like bitcoin volatility, for instance. That way, you will not panic sell and possibly lose out on higher returns.
Finally, use resources like bitcoin cash news and bitcoin real-time updates for information.