Cryptocurrency investments have been regarded with increasing scrutiny by the public. While some are certain that digital coins are not far from going fully mainstream and being used in daily transactions, others are more reticent. The reluctance is primarily due to the fact crypto is well-known for its volatile prices. The tendency of cyber money to present with huge variations over days and sometimes even hours is what has convinced many investors that crypto can never be considered a reliable asset. After all, who wants to invest capital into something that’s more likely to bring losses rather than gains?
This view has only been exacerbated by the current bear market, which saw crypto plummet alongside other assets, such as stocks. The crypto winter has seen traders face up against significant losses, with many choosing to sell their cryptocurrencies as fast as possible, frightened at the prospect that waiting any further will only make for further losses. And while nobody can deny that 2022 has been particularly troublesome for crypto, the situation looks different for the new year. Indeed, some researchers estimate that 2023 will resemble the bull markets of 2020 and 2021, when crypto had returns of 59% and 60%, respectively.
If you’re still on the fence about whether or not you should invest in crypto, here are some aspects that are likely to lean the scales toward a resounding “yes.”
Businesses are joining in
While crypto hasn’t yet been accepted as legal tender worldwide and still seems quite far away from achieving this goal, there’s no doubt that societal acceptance is much higher nowadays than it was a decade ago. While not long ago digital money was more or less a niche interest, nowadays everyone, even those that aren’t involved in trading, has an idea about what it is and how it can be used.
Another sign that increasing societal acceptance has been the rule when it comes to crypto is that businesses have begun using digital currencies at a rising rate. Institutional investors are investing in cryptocurrencies and have started to view them as legitimate assets. Their accessibility and ease of use are the main advantages turning savvy traders towards them.
And the usage isn’t only reserved for internal processes. Customers have the option to pay for their online orders in crypto as well. While this is mainly reserved for e-commerce, given the fact cyber currencies are internet-powered assets, you also have the option to convert your cryptocurrencies into fiat money and use them in physical stores. While direct crypto payments are not yet commonplace in brick-and-mortar store locations, they’re not non-existent, meaning that it likely won’t be long until the trend expands and more shops allow it, particularly those in the larger cities.
The fact that crypto is used with increasing frequency within businesses means that entrepreneurs have noticed its potential and digital assets won’t be going anywhere anytime soon.
The most promising crypto
Because cryptocurrencies have become so popular, there are currently thousands of coins out there waiting for traders to grab them. However, they weren’t all created equal. While all crypto has been designed following the blueprint set by bitcoin back in 2009, not all have achieved the same success. The best thing you can do to protect your capital is to invest in currencies that are relatively well-known on the market. While all currencies are known for volatility, the more obscure a coin, the more unstable it tends to be. Moreover, scams can sometimes masquerade as newcomers to the market. You don’t want to invest a large sum of money in something that’s essentially a pyramid scheme.
One of the most reliable altcoins to trade in is Ethereum. The blockchain, which hosts several other cryptos apart from its native coin, Ether, has a sharding update set for 2023. This process is set to split up workloads horizontally across the database. It will make for reduced congestion, increased speed and reduced transaction fees. Sharding can potentially build a pathway toward the completion of up to 100,000 transactions per second. As such, you may want to keep an eye on the Ethereum price since ETH is bound to draw in a large number of traders in the following year, and more people will look into how to buy Ethereum.
Assess your risk comfort
Cryptocurrencies are relatively new assets, but they’re skyrocketed through financial markets like nothing before or since. Many have jumped at the opportunity to gain money and amass wealth through crypto, but the truth is that, as an asset, cryptocurrencies don’t exactly operate that way. Digital money works better as a long-term investment that can create store of value over an extended period rather than a swift trading venture. And because prices change so fast, you must also assess your relationship with money before you place an investment.
As a general rule, you should avoid investing money you need to perform daily life activities at all costs. You mustn’t dip into your savings account, either. If prices plummet suddenly, seeing all this money essentially vanish into thin air can put you in a desperate financial situation. Always invest only as much as you’re prepared to lose, and be careful that you don’t react emotionally during trading.
Sometimes, price fluctuations can cause traders to act erratically, afraid of missing out on a stellar opportunity. Instead, all they manage to achieve is damage their own finances. You also shouldn’t build a portfolio that’s based solely on crypto. Diversification means that you don’t have to worry about losing everything in the case of a crash.
Ultimately, there’s no guaranteed recipe for success, and you may triumph where others have failed. Investing in crypto depends on how much risk you’re willing to tolerate. Crypto can be a lucrative investment that brings you significant revenue, but you must be very mindful of the undertakings you become involved in. And, of course, it also depends on your unique situation. If you feel like you’re currently not financially stable enough to take on a crypto investment, it’s probably best to withhold from it until you are. Weighing the pros and cons will determine whether or not it is the right thing for you.