Recently with all the hype the Crypto world has been getting, there are many friends and family members asking about it. One of my friends asked me about investing in Crypto and these are some of the pointers I gave him before diving into the Crypto world. Hope you guys have a good read and if I missed out on anything do let me know.
Here’s a few things you need to understand before you consider investing in cryptocurrency.
- It is an unregulated market and purely relies on market forces as far as determination of value of any cryptocurrency is concerned. Hence, the market is rather volatile
- The cryptocurrency market is also overrun with speculative traders and that also adds to the destabilization of the spot value of the underlying currency.
- Elon Musk isn't some Crypto guru or developer but his words have an impact on the market.
- Whether the market will follow a bullish or bearish trend in the coming months is still debatable as many crypto-investors are undeterred and still expect bitcoin to, at the very least, regain its value while the skeptics believe in the opposite.
- Meme coins and their development is merely a ruse to attract netizens and these currencies carry huge risks.
- The crypto-investments, in general, do not hedge you against the risks pertaining to the stock market. Therefore, if the Wall-street stock market plummets cryptocurrency market will likely follow.
- Also keep in mind that unlike commodity assets, where the risks are relatively lower, this doesn’t hedge you against an economic downturn either.
- When you hear about people turning up daily profits, these people are commonly knowns as scalpers, they generally capitalize on price fluctuations over a short period of time.
- Researching and understanding the currency itself is absolutely necessary. As a vast majority of these currencies are developed on blockchain technology. I can assure you that blockchain technology itself provides a lot more security be it finance or communications and will have future applications across various fields but for a currency to prove its legitimacy it is important that there are future prospects in terms of integration into the existing financial system and development of an ecosystem that allows it to be used as a currency.
- Understand the psychology of a market cycle and you may even use the previous cycle as a benchmark for speculations, during the previous cycle the market nearly lost 40% of its entire value about 6 times yet the bullish trend continued. So I suggest that you ignore people that have no knowledge and are bubbling over with immense joy while their self fulfilling prophecies about cryptocurrency are finally coming true.
- Lastly, despite the risks if you still feel compelled to invest then educate yourself and initially, only invest the money that you can be wasteful with, never cut down on your necessities, never put your entire life’s savings on the line. Remember, Cryptocurrency is too volatile to be considered a safe-haven asset.
Congratulations @shaheerbari! You have completed the following achievement on the Hive blockchain and have been rewarded with new badge(s) :
Your next target is to reach 35000 upvotes.
You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word
STOPCheck out the last post from @hivebuzz:
Support the HiveBuzz project. Vote for our proposal!