Is Now A Good Time To Start Investing In Crypto?
Investing in cryptocurrencies can always seem quite daunting due to the fluctuations and volatility that permeate the trading environment. While all assets are associated with a certain degree of risk, digital coins and tokens are known for being much more challenging to work with. When investors look for the best cryptocurrency deals they analyze the volume, historical price action, and macroeconomic conditions.
While this may seem tedious and like too much work, it is, in fact, the only way to have a successful portfolio. Understanding what these metrics entail will enable you to develop a comprehensive strategy that considers your unique financial goals and ensures that your losses don’t exceed your gains.
Recently, things have begun improving as well, with most researchers believing that the marketplace is starting to become much more mature. The increasing clarity of the regulatory landscape has helped tremendously, as it makes investors feel more secure as the ecosystem looks much more trustworthy. As a result, cryptocurrencies are increasingly used and integrated into daily life, with people using them to complete payments and businesses adding them to their portfolios.
According to Jonas Juenger, Binance.com’s Region Director DACH, “Local Binance Pay collaborations show how crypto is becoming part of everyday life – including grocery shopping in supermarkets, and highlights the powerful synergy between traditional retail and digital payment solutions, offering an enriched shopping experience. It’s proof that crypto isn’t just for traders or institutions, it’s for everyone.”
Getting started
The first thing you need to do when trying to acquire cryptocurrencies is to do your research. Learning how the market works is crucial for your long-term well-being, as it will allow you to be more responsible with how you spend your funds. While the marketplace is known for being fast-paced and challenging to keep up with at times, you should always pace yourself and take things slowly instead of rushing. Acting emotionally is unfortunately quite common in the crypto world, as FOMO can be tough to resist, but history shows that the investors who did well in the crypto world were the ones who knew how to hold on to their coins and accumulate at the right times.
The next step is to find the exchange that is best for you. There are numerous options available nowadays, as more people have entered the market, resulting in skyrocketing demand. That means that many fraudulent platforms have appeared as well, which is why it is so important to choose a platform you know you can trust. Binance is one of the most noteworthy examples, being the largest crypto exchange in terms of daily volume. Working with a platform you know you can trust is of paramount importance in this ecosystem, as losing your cryptocurrencies is typically a final thing, as they cannot be recovered the same way fiat would be.
The advantages
Cryptocurrencies are still a relatively new asset class, so they still have a long way ahead of them before they can be considered fully developed. They represent a new paradigm for money, though, one that is decentralized and operates differently from the standard systems people are used to. The novelty is one of the main features that attracted investors to the market in the first place, and those who are interested in technological developments felt that they could be part of something unique and fresh. Cryptocurrencies and their inherent system have eliminated the possibility of having a single point of failure as a result of their decentralized nature.
Financial institutions, on the other hand, can unwillingly kickstart global crises. The best-known example is the Panic of 2008, caused by excessive speculation on property values. On top of that, cryptocurrencies are also known for their ability to allow users to perform transactions much faster. There are no third-party intermediaries either, making transacting parties significantly more efficient in their endeavors than if they were to use traditional methods.
Why you need to be careful
Although the crypto market is known for its safety and the ability to maintain the integrity of its users, you must also remember that you’re the one in charge of your portfolio. Digital wallets, which are used to store holdings, are popular targets, who know that they can access considerable amounts of capital by cracking their codes. Given the fact that cyber coins are much more difficult to track, they have been used as a tool for multiple purposes, but that is now gradually becoming a thing of the past as cryptocurrencies are increasingly integrated into the world of mainstream finance.
One of the primary concerns traders have is the growing centralization of the cryptocurrency environment. The reason is that ownership has become more and more concentrated, with a relatively small number of investors, known as whales, owning and trading huge amounts of crypto, a scenario that allows them to have an impact on the prices. And while theoretically mining can be done by anyone with a working computer and a strong Internet connection, the reality is that the process is much more complex than that and requires the proper tools to yield results. The energy used would far exceed the costs of a household, but apart from the huge bills, there is also the fact that mining itself has started to be more centralized as large companies started doing it as well (and they naturally have access to way more resources).
Is crypto right for you?
Dealing with cryptocurrencies is certainly not the right choice for everybody. If you’re not the kind of investor who can handle considerable risks, it is better to steer clear of the market, or at least grow your tolerance before jumping in. If you’re looking to grow your portfolio slowly and steadily, acquiring crypto could be the right choice for you. However, you’ll have to resist selling it or making any impulsive movements as its value can only appreciate in time.
The best cryptocurrency to invest in will also depend on the market outlook, your personal goals, and the amount of risk you’re comfortable dealing with. This is why understanding the risks is so important and why you need to approach the market with realistic expectations instead of viewing it as a get-rich-quick scheme.
